2011 Year in Review: Mexico

Highlights of the year’s major events in the Mexican auto industry:

• Mexico’s auto industry begins the year on a positive note with news that vehicle production for 2010 jumped 50% from the prior-year and analysts predicting a strong 2011. “The industrial sector continues to contribute positively to real activity,” Goldman Sachs economist Alberto Ramos writes in a client note.

• Production continues to see gains in January, up 21.2% from year-ago to 207,662 units. Domestic builds rise 20.8% and export assemblies grow 21.3%. U.S. Big Three output jumps 10.9% to a combined 103,254 units.

Mexico’s new-car sales in the month rise 13.2% from year-ago to 45,149 units, but light-trucks drop 12% to 23,521.

• Grace Lieblein, General Motor’s the top executive in Mexico, says violence by drug traffickers is affecting the auto maker’s sales in the pickup truck and luxury segments. Pickups are a prime target of thieves and luxury vehicles attract unwanted attention.

“People are becoming a little more hesitant about being in a big, flashy, expensive vehicle,” she says. “It’s not huge, but we definitely have seen an impact.”

• Fiat says it will build the new Fiat Freemont cross/utility vehicle, a rebadged and slightly modified version of the ʼ11 Dodge Journey, at Chrysler’s Toluca plant. The Journey and North American-market Fiat 500 also are assembled there.

• Auto-parts maker Magna International announces it will invest $100 million to set up a factory to produce stamped and welded assemblies to expand its presence in the country. The facility, to be located in San Luis Potosi, is expected to be about 300,000 sq.-ft. (27,871 sq.-m) in size and employ some 700 people at full capacity. It will be a division of Cosma International, a Magna unit.

Fiat to assemble Freemont CUV in Mexico.

• Volkswagen in late January begins construction of its new Silao engine plant, slated to launch production in 2013. The new facility will have capacity for 330,000 units annually. The powerplants will support VW’s car-building operations in Puebla, as well as Chattanooga, TN.

The auto maker says it is spending $550 million on developing the new engines and building the plant, which will employ 700 workers medium-term.

• IMS Buhrke-Olson announces a major expansion of its manufacturing plant in Monterrey that will increase total size from 42,000 sq.-ft. (3,900 sq.-m) to 142,000 sq.-ft. (13,192 sq.-m).

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The supplier says the expansion is necessitated by a steady increase in metal stamping and assembly business performed at the site. The addition also will allow more space for logistics and research and development activities. Employment is expected to grow by 30-60 workers in 2011 and another 100 in 2012.

United Auto Workers President Bob King says the union is campaigning in Mexico to win higher wages for workers there. If successful, he says, U.S. UAW members could benefit because auto makers will have less incentive to shift production south of the border.

• Automotive supplier Preh’s new 83,000-sq.-ft. (7,710-sq.-m) plant in Monterrey nears completion, with equipment installation scheduled to begin in May and start-up operations beginning by June. The facility will focus on electronic assembly and final-product testing and will be expanded if necessary.

• Mazda announces in June plans to build a new factory in Mexico and a sales company in Brazil in partnership with Japanese trading-house Sumitomo. The move follows an announcement in May that Mazda is pulling out of its AutoAlliance International joint-venture with Ford in Flat Rock, MI. Theplant has built the Mazda6 midsize sedan since 2002.

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Mazda says the new Mexico JVs will enhance both partners’ business in the rapidly growing Central and South American markets. The production facility, slated to begin operations in fiscal 2013, will be located in Salamanca, about 155 miles (250 km) northwest of Mexico City and have an annual capacity of 140,000 units. It will build the Mazda2 B-car and Mazda3 C-car models.

• Following a strong start to the year, Nissan in June says it expects production to jump 20% in 2011, compared with prior-year. “It will be an all-time record for Nissan in Mexico,” Nissan Mexico Chief Executive Jose Munoz tells Reuters.

• Honda says it will invest $800 million in a new vehicle and engine plant that will have capacity to produce 200,000 units annually beginning in 2014. The Japanese auto maker says only that the models will be “fuel-efficient subcompact vehicles.”

The 60.9 million-sq.-ft. (5.66 million-sq.-m) facility is to be located in a suburb of Celaya, Guanajuato, about 210 miles (340 km) east of Honda’s existing vehicle, motorcycle and parts operations in El Salto, Jalisco.

It will be Honda’s eighth automobile plant in North America and increase its capacity in the region to 1.83 million vehicles in 2014 from 1.63 million today.

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