North American Capacity Utilization to Slide Below 100% in 2017
While capacity utilization in the U.S. and Canada will decline in 2017, Mexico’s facilities will increase to 104%.
![North American Capacity Utilization to Slide Below 100% in 2017 North American Capacity Utilization to Slide Below 100% in 2017](https://eu-images.contentstack.com/v3/assets/blt7121b6ec5c11097b/blt5dbd22e7b7db060e/66197c26461239e1a3fb6f95/nautil1609.png?width=1280&auto=webp&quality=95&format=jpg&disable=upscale)
North American light-vehicle capacity utilization will end 2016 at an estimated 101.1%, highest on record and the second consecutive year to reach 100% or more.
The decline in 2017 is due to a combination of an expected production slowdown and increase in straight-time capacity in the U.S. and Mexico. Straight-time capacity is the estimated production each plant can produce, based on a schedule of two 8-hour shifts per day, five days per week, over 52 weeks per year.
Production in 2016 is forecast to end at 17.77 million units, 1.9% above 2015’s 17.44 million. A slowdown in demand is causing a drop in 2017’s forecast output to 17.62 million units. Thus, capacity utilization is expected to decline to 97.6% next year.
However, while capacity utilization in the U.S. and Canada will decline in 2017, Mexico facilities will increase to 103.9% from 100.2% in 2016.
Production in Mexico will grow 13.1% in 2017 from 2016 to 3.93 million units, with FCA US, General Motors, Kia, Mazda and Volkswagen all contributing big increases.
Increased capacity will be part of the picture. New plants at both Kia and Volkswagen/Audi that opened during 2016 will be in their first full year of production in 2017, while GM is increasing capacity and production in San Luis Potosi, as is Toyota in Tijuana.
U.S. production is forecast to decline 3.6% in 2017 to 11.50 million units from 2016’s projected 11.93 million. Capacity utilization will slide to 98.2% next year from a forecasted 101.1% in 2016.
Straight-time capacity will rise in the U.S. in 2017 due to increases made to Honda’s Greensburg, IN, facility, which adds the Honda CR-V to its mix in January, and a small uptick at Tesla’s Fremont, CA, plant.
Capacity utilization in Canada is pegged at 85.5% in 2017, down from 2016’s forecast 92.6%, and lowest in the country since 83.4% in 2011. Production is expected to fall by 7.7% in 2017 to 2.19 million units from 2016’s 2.37 million.
By manufacturer, only Daimler, Hyundai, Mazda and Volkswagen/Audi are forecast for increased capacity utilization in 2017 from 2016.
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