General Motors (GM) has announced total investment of USD3.6 billion in all four of its manufacturing complexes in Mexico, adding to the already significant investments from a variety of other automakers.
IHS Automotive perspective | |
Significance | GM de Mexico has announced plans to invest another USD3.6 billion in Mexican production capacity, doubling available output and increasing investment in the region to USD6 billion between 2013 and 2018. |
Implications | Other manufacturers are also seeing opportunities to invest in Mexico; however, GM has been producing vehicles and transmissions in the country for decades. The investment will add 5,600 jobs, says GM. |
Outlook | GM is expected to increase its production capacity of B- and C-segment vehicles in Mexico, as well as boost crossover production, while maintaining full-size pick-up production at a largely stable level. The expected changes to GM's production mix in the region will leave the company better situated to take advantage of Mexico's multitude of free-trade agreements, as well as ensure adequate capacity to supply an increased appetite in the US for B- and C-segment SUVs. |
General Motors (GM) announced yesterday (11 December) additional investment of USD3.6 billion in its Mexican production facilities through 2018. Combined with the USD1.4 billion already invested, the company is putting USD6 billion into production expansion between 2013 and 2018, reports the Wall Street Journal and the Automotive News. The announcement was made by GM de Mexico's managing director, Ernesto Hernandez, with Mexican economy minister Ildefonso Guajardo.
The specific details of the investment were not confirmed, though GM said it would involve all four of its manufacturing complexes in the country, in Ramos Arizpe, Silao, San Luis Potisi, and Toluca. Hernandez confirmed the investment would increase the number of jobs in the plants by 5,600, and said the investment would support expansion projects, modernisation of production lines, and technological advances in vehicles and parts. GM has not yet confirmed how much of the investment is related to vehicle, transmission, or engine production, or which plants are earmarked for what amount of capital injection.
Outlook and implications
GM is one of many automakers investing in Mexican production, taking advantage of a skilled but lower-cost workforce, established infrastructure and the country's multiple free-trade agreements. In GM's case, however, it is building on established facilities and not developing all-new plants.
GM is expected to increase production capacity of B- and C-segment vehicles in Mexico, as well as boost crossover production, while production of full-size pick-ups will remain largely stable. The expected changes to GM's production mix in the region will leave the company better situated to take advantage of Mexico's multitude of free-trade agreements, as well as ensure adequate capacity to supply an increased appetite in the US for B- and C-segment sport utility vehicles (SUVs).
In 2013, GM produced 647,610 vehicles in Mexico, which is forecast to increase to 682,050 in 2014. Currently, IHS Automotive forecasts that production will increase to at least 755,000 units by 2018. GM also built 874,013 engines in the country last year, which is forecast to increase to 1.1 million units as soon as 2016. On the transmission front, GM's production is forecast to increase from 1.19 million units in 2013 to 1.30 million in 2014 and 1.43 million in 2018.
The Ramos Arizpe assembly plant builds vehicles from the Global Gamma architecture, as well as Theta; we forecast the plant will continue to build vehicles on the next generation of these platforms, as well as add production of SUVs from the next-generation Global Delta platform in 2016, specifically adding the Buick Verano and Chevrolet Cruze and Equinox to a roster that includes the Chevrolet Sonic and Captiva Sport, as well as the Cadillac SRX, though SRX production will be moved to the company's facility in Spring Hill, Tennessee (United States). Ramos Azripe also builds V6 and V8 engines destined for full-size trucks and SUVs, as well as Buick Enclave and Cadillac product offerings. Engine production at the plant is forecast to decrease in the coming years, however, dropping from 227,000 units in 2013 to 165,000 units in 2018. In terms of transmissions, Ramos Azripe builds single-speed EV transmissions for ELR and Volt and 6-speed transmissions for Cadillac SRX, XTS and GMC Terrain. A 4-speed transmission is still assembled for the GMC Savanna, in low volume. This facility is forecast for dwindling transmission production over the forecast period, as GM moves from the 6-speed unit to a 9-speed front-drive transmission about 2017.
GM's San Luis Potosi plant builds the Chevrolet Trax and Aveo, but its forecast to add the next-generation GMC Terrain, as well as a B-segment product, for that brand. The plant's output will then include Global Gamma and Delta products, and increase from 127,515 units in 2013 to about 275,000 units in 2018. The 9-speed transmission due in 2017 for GM crossover and mid-size sedans will boost transmission production at San Luis Potosi from 361,194 units in 2013 to about 813,000 units in 2018.
GM's Silao vehicle assembly plant is dedicated to full-size pick-up trucks, which is not forecast to change; output is expected to slip from about 376,000 units in 2014 to 300,700 in 2019, in part as the trucks are due for a model changeover that year. Engine production at Silao is centred on V8 units, supplying both high-performance Chevrolet and Cadillac models, as well as full-size trucks and SUVs. As V8 engines are under pressure from fuel-efficiency and emissions regulations, IHS Automotive forecasts engine production will decrease from 227,396 units in 2013 to about 165,000 units in 2018. Silao's transmission activity is also forecast to increase, though the plant's output will shift from a mix of 6-speed and 8-speed automatic transmission production to all 8-speed transmissions by about 2019. Transmission output is forecast to grow from 1.19 million units in 2013 to 1.4 million units in 2018.
GM's Toluca plant builds engines and transmissions, but not vehicles. As that complex builds 4-cylinder powerplants and is due to add a 3-cylinder unit, powertrain output is forecast to increase from 90,346 units in 2013 to 450,000 units in 2018. That facility is due to add GM's new generation of small gasoline (petrol) engines, and expected to see significant capacity growth.