OEMs continue to push for regional supply chains to shorten geographic distances, reduce transportation costs and provide better oversight of their supplier base. Mexico got that message as well, according to a recent editorial in IHS SupplierBusiness. The "country's association of auto parts manufacturers aims to increase suppliers at the Tier 2 level to localize operations as the country's light-vehicle production is set to pass Brazil," said the editorial.
Light-vehicle production in Mexico is up 7.2% on the year-to-date and "further investments by automakers and component suppliers" as "Mexico is currently booming as an automotive production base." As PlasticsToday has written of late, all of the major global automotive OEMs have - or will soon have - operations in Mexico. "As a result, suppliers also continue to expand their facilities in the country as they seek to optimize their production footprint and support their OEM customers," stated the SupplierBusiness editorial. "There has been a marked increase in plant openings or investments by Tier 1 automotive suppliers in the last year."
SupplierBusiness reports that Mexico will see production of 3.24 million units in2014 on its way towards 4.2 million units in 2017, eclipsing Brazilian output in 2014. "The two [countries] are forecast to run a tight race until 2017, when Mexico takes a firm lead," said SupplierBusiness. "In 2014, production should increase in the third quarter, though output may be sequentially lower in the fourth [quarter] 2014. We also see output surpassing 4.80 million light vehicle units in 2019 as capacity and component supply6 networks are widened and improved.