ASSEMBLER INVESTMENT
ANNOUNCEMENTS
Dr. A.J. Faria, Co-Director
Office of Automotive & Vehicle Research
OdetteSchool of Business
University of Windsor
Windsor, OntarioN9B 3P4
(519) 253-3000, ext. 3101
(519) 973-7073 (FAX)
E-mail:
February 2013
INTRODUCTION1
WORLDWIDE AUTOMOBILE ASSEMBLER
INVESTMENT ANNOUNCEMENTS2
- Chrysler11
B. Ford11
C. General Motors12
D. The Japanese Assemblers13
E. South Korean Assemblers15
F. Other Assemblers16
SUMMARY19
INVESTMENT DETAILS23
The OAVR was formed in 1995 within the Odette School of Business at the University of Windsor and serves the management/marketing/forecasting needs of the Canadian vehicle, automotive and automotive parts industries. The OAVR serves as a research, consulting, data gathering, production and sales forecasting, engineering and testing, training and resources centre for all parts of the automotive and transportation industries. The goal of the OAVR is to support the management needs of the automotive assembly, vehicle transportation and automotive parts industries.
The OAVR is prepared to help you study industry trends, determine new markets for your firm to enter, assess product sales potentials, assess your competitive landscape, develop management training programs for your company, assist in developing marketing plans, help you institute lean manufacturing systems, provide basic industry information and data, and provide overall management consulting services. The Co-Directors of the OAVR, Pete Mateja and Tony Faria, have many years of automotive, trucking and transportation experience.
The following report presents an overview of major capacity growing investment announcements made by the Detroit 3, the Japanese assemblers, the South Korean assemblers, and other automobile assemblers around the world (European, Chinese, Indian, etc.). The investment announcements reported in detail cover the period from January 1, 2012 to December 31, 2012. The sources used to gather the investment information for this report included: (1) Press releases from the automobile assemblers; (2) An examination of automotive assembler websites; (3) Ongoing examinations of general automotive industry websites such as The AutoSource, Autonews, Wardsauto, AutosInsider, Automotivedigest and The Auto Directory; (4) Contacts with major automotive associations; (5) Ongoing contacts with major automotive publishers and automotive research organizations; and (6) An ongoing examination of all issues of major automotive industry publications. This report continues the series of Major Automotive Assembler Investment Announcements reports dating back to 1995. A three page report summary beginning on page 19 provides a quick overview of the major report findings.
Total worldwide production of light and medium dutyvehicles in 2012was approximately 81 million units, up 6.6% from the 76 million units assembled globally in 2011. As the North American market continues to recover, for the second consecutive year, vehicle assembly grew more in North America (17.6%) than global production growth. China remained the largest vehicle production and sales country in the world in 2012 and will clearly hold this lead for the foreseeable future. Total vehicle production for 2012, with a forecast for 2017 by region of the world, is shown in Table 1.
TABLE 1GLOBAL VEHICLE PRODUCTION BY REGION OF THE WORLD
2012 / 2017
Region / Units / Percent / Units / Percent
Asia/Pacific / 40,464,564 / 49.9% / 51,477,000 / 51.2%
Europe / 20,252,228 / 24.9% / 24,036,000 / 23.9%
North America / 15,475,654 / 19.1% / 18,291,000 / 18.2%
South America / 4,363,587 / 5.4% / 6,109,000 / 6.1%
Africa / 551,531 / 0.7% / 701,000 / 0.7%
81,107,564 / 100.0% / 100,614,000 / 100.0%
Source: OICAand OAVR
As can be seen in Table 1, the Asia/Pacific region which includes China, India, Japan and Korea now accounts for over 49 percent of global vehicle assembly and will make up more than half of global assembly in 2017. In 2004, the Asia/Pacific region accounted for only one-third of global vehicle assembly. Western and Eastern Europe account for nearly 25 percent of global assembly but will lose a point of share by 2017 whileNorth America accounted for 19.1% of global assembly in 2012, down from 32.2% in 1995. North America will fall under 19 percent of global light and medium duty assembly by 2017.
The production forecast for 2017 shown in Table 1 indicates continuing production growth for North America with an increase in vehicle assembly over 2012 of 2.8 million units by 2017. In fact, the forecasted vehicle assembly of 18,291,000light and medium vehiclesfor 2017will be a new North American vehicle assembly record. While this is a positive for North American parts suppliers, vehicle assembly in the Asia/Pacific region will grow by over 11 million units from 2012 to 2017. Of the forecasted global increase in production of 19.5 million units from 2012 to 2017, 16.7million units or 85.6 percent of the global growth in vehicle assembly is expected to be outside of North America.
Total vehicle production in North America in 2012 was up 17.6% from 2011. Final 2012 North American vehicle production totalled 15,475,654 units (see Table 2 for production figures by country). By historical standards, 2012 was the best North American production year since 2006. From 1997through 2005, North American vehicle assembly topped 16 million units each year peaking at 17,653,760 in 2000.
Light vehicle production in Canada for 2012 was up 15.4%to 2,454,064units while light vehicle sales in Canada for 2012 were up5.7% to 1,677,990 units. Canadian light vehicle sales in 2012 were only 52,719 units short of the all time sales record of 1,730,709 units achieved in 2002.
Light vehicle production in the U.S. for 2012was up 19.5% to 10,140,812 units while production in Mexico for 2012 was 2,880,778 units, up 12.6% from 2011. For the fifth straight year, light vehicle assembly in Mexico exceeded assembly in Canada and, once again, established a new assembly record for Mexico.
Light vehicle unit sales in the U.S. market, which is very important to many Canadian parts suppliers, were up 13.4% in 2012 to 14,492,398 units. Light vehicle sales in Mexico for 2012 were up 5.7% to a total of 956,618 units. Vehicle sales for all of North America for 2012 totalled 17,127,006 units, an increase ofover 1.8 million units and 12.1% over 2011. For 2013, light vehicle sales in North America are expected to grow to approximately 18,340,000 units, an increase of over 1.2 million units or 7.1% percent over 2012 North American sales (see Table 3).
According to the Office of Transportation and Machinery, U.S.DepartmentofCommerce, the North American OEM parts marketfor 2012 grew to an estimated $288.1billion. The U.S. parts market grew to an estimated $183.9 billion; the Mexican parts market grew to an estimated $55.6 billion; and the Canadian parts market grew to an estimated $48.6 billion. As auto production grows, as it is currently forecasted to through 2017, so will the OEM parts market.
The Original Equipment Suppliers Association (OESA) estimates that the global automotive parts industry exceeded $950 billion in 2012. As such, the OEM parts market outside of North America is over three times the size of the North American market. Canada has no significant export markets for automotive parts other than the U.S. Canada exported an estimated $18 billion in automotive parts to the U.S. in 2012 and only $987 million to all other countries around the world (with Mexico accounting for more than half of that amount). More automotive parts are being exported to the U.S. from Mexico (over $33 billion) and Japan (over $19 billion) and China is now exporting over $12 billion in automotive parts to the U.S. As such, Canadian suppliers need to find export markets other than the U.S.
North American light vehicle production for 2013 is expected to increase by 4.6% over 2012 to 16.2 million units. North American light vehicle production forecasts by home market of the assembler for 2013 through 2017 are shown in Table 4 with a percentage breakout in Table 5. Vehicle assembly in North America is expected to exceed 16 million units in 2013 and 2014 and exceed 17 million units from 2015 to 2017.
The Detroit 3 accounted for nearly 60 percent of North American light vehicle assembly in 2011. This figure was artificially high due to limitations on assembly at Japanese plants in North America brought about by natural disasters in Japan and Thailand. Assembly at the Detroit 3, South Korean and European plants in North America is expected to be only slightly higher in 2013. There will be a significant increase in assembly at the Japanese plants in North America in 2013 as the Japanese continue to make up for lost assembly in 2011 and attempt to recapture market share. As well, capacity is being added at a number of Japanese plants in Canada, the U.S. and Mexico as the Japanese continue to shift more assembly to North America from Japan.
From 2012 to 2017, light vehicle assembly at Detroit 3 plants in North America will grow by slightly over 600,000 units; assembly at South Korean plants will grow by over 100,000 units; assembly at European plants will grow by over 190,000 units; and assembly at Japanese plants in North America will grow by nearly 1,270,000 units. As a percent of all North American assembly, the Detroit 3 will decline from 54.5% in 2012 to 51.2% in 2017; the Japanese will grow from 32.7% in 2012 to 35.8% in 2017; while the South Koreans will continue to account for just under 5 percent of North American assembly and the European companies will continue to account for approximately 8% of North American assembly. As recently as 2000, the Detroit 3 accounted for 75.6% of North American production share.
For 2012, the light vehicle sales market share of the Detroit 3 in North America declined to 43.4% from 46.6% in 2011 (see Table 6). Detroit 3 market share was artificially high in 2011 due to shortages of Japanese vehicles in the market. The Japanese companies regained lost market share in 2012 (up to 37.3%) with the European companies also growing slightly and the South Koreans remaining unchanged.
While the global automotive market has still not fully recovered, assemblers are continuing to invest in new capacity based on each individual company’s sales expectations and on each company’s forecasts of where the market will be growing. The total announced worldwide capacity investments of the major automotive assemblers (see Table 7) over the January 1, 2012 to December 31, 2012 period documented in this report were $16.13 billion (Canadian). This is a decrease of 32.5% from the $24.136 billion (Canadian) reported in 2011 and very close tothe $17.112 billion of new capacity investments announced in 2010. As can be seen in Table 8, the countries receiving the largest new capacity investment announcements over the past four years have beenChina ($40.222 billion), Brazil ($7.966 billion), Mexico ($7.363 billion), Russia ($2.816 billion), India ($2.265 billion) and the U.S. ($2.082 billion). Over 57 percent of all new capacity investment announcements made over the past four years have been in China.
Table7 summarizes new capacity investment announcement totals by major global assemblers for the past four years. Table 8 summarizes new capacity investment totals by country of investment for the past four years. For all of 2012, total worldwide new capacity investment announcements were down over $8 billion from 2011 reflecting the heavy announcements in 2011 and the ongoing poor light vehicle market in Western Europe. As with past reports in this series, only investments in new assembly plants or to increase capacity at existing plants are included. Investments to upgrade plants that have no effect on capacity are not included. As well, investments by the assemblers in OEM owned parts plants are not included. Complete details on all new capacity investment announcements made in 2012 are shown in the appendix to this report beginning on page 23.
The majority of investment announcements reported by the assemblers were in U.S. dollars. Some announcements, though, were in euros, yen, won or other currencies. Appropriate exchange rates as published in the December 31, 2012 issue ofThe Globe and Mail were used to convert to Canadian dollars. The information provided at the back of this report includes the date of each investment announcement, details of the new capacity being added, the dollar amount of the investment, the additional units of capacity or total new units of capacity at the facility, the date that the new capacity is expected to come on-line, the number of new jobs created, and the location where the new capacity will come on-line.
As can be seen in Table 7, most of the major global automotive assemblers made new capacity announcements in 2012.
As can be seen in Table 8, the countries receiving the largest investment announcements during 2012 were China (by a large margin), Mexico, Russia and Brazil. China alone accounted for 59.6% of all the investment announcements made in 2012. There were two new capacity growing announcements made for Canada in 2012, both by Toyota (in Woodstock and Cambridge). New capacity announcements from the Detroit 3 in 2012 were made for China, Mexicoand Russia.
TABLE 2
NORTH AMERICAN VEHICLE PRODUCTION (2012)
Percent
Country Unit ProductionChange
United States10,140,812+19.5%
Canada 2,454,064 +15.4%
Mexico2,880,778 +12.6%
Total15,475,654 +17.6%
______
Source:Automotive NewsDataCenter
TABLE 3
NORTH AMERICAN SALES FORECAST (2013)
Sales
CountryForecast (Units)
U.S. 15,534,000
Canada 1,742,000
Mexico 1,064,000
18,340,000
______
Source: OAVR
TABLE 4NORTH AMERICAN LIGHT VEHICLE PRODUCTION FORECAST (units)
DETROIT 3 / JAPANESE / SOUTH
KOREAN / EUROPEAN / TOTAL
2012* / 8,430,760 / 5,053,287 / 719,868 / 1,266,761 / 15,470,676
2013 / 8,598,000 / 5,548,000 / 759,000 / 1,283,000 / 16,188,000
2014 / 8,742,000 / 5,937,000 / 790,000 / 1,294,000 / 16,763,000
2015 / 8,755,000 / 6,188,000 / 786,000 / 1,412,000 / 17,141,000
2016 / 8,885,000 / 6,291,000 / 816,000 / 1,428,000 / 17,420,000
2017 / 9,037,000 / 6,323,000 / 827,000 / 1,458,000 / 17,645,000
* = Actual
Source: Office of Automotive & Vehicle Research
TABLE 5
NORTH AMERICAN LITE VEHICLE PRODUCTION FORECAST (percent)
DETROIT 3 / JAPANESE / SOUTH
KOREAN / EUROPEAN / TOTAL
2012* / 54.5% / 32.7% / 4.7% / 8.2% / 100%
2013 / 53.1% / 34.3% / 4.7% / 7.9% / 100%
2014 / 52.2% / 35.4% / 4.7% / 7.7% / 100%
2015 / 51.1% / 36.1% / 4.6% / 8.2% / 100%
2016 / 51.0% / 36.1% / 4.7% / 8.2% / 100%
2017 / 51.2% / 35.8% / 4.7% / 8.3% / 100%
*= Actual
TABLE 6
NORTH AMERICANLIGHT VEHICLE SALES MARKET SHARE
2008 / 2009 / 2010 / 2011 / 2012Detroit 3 / 48.0% / 44.5% / 45.2% / 46.6% / 43.4%
Japanese / 39.2% / 39.9% / 38.6% / 34.7% / 37.3%
European / 7.5% / 8.5% / 8.1% / 9.9% / 10.5%
South Korean / 5.3% / 7.1% / 8.1% / 8.8% / 8.8%
TABLE 7
TOTAL WORLDWIDE INVESTMENT ANNOUNCEMENTS
BY ASSEMBLER - FULL YEAR
(Canadian Dollars - In Billions)
2009 / 2010 / 2011 / 2012Chrysler / $0.000 / $0.500 / $0.000 / $1.640
Ford / $1.754 / $0.750 / $1.000 / $1.360
General Motors / $1.754 / $0.916 / $1.500 / $3.760
Honda / $0.000 / $0.136 / $0.884 / $0.040
Nissan / $0.000 / $0.020 / $4.920 / $1.458
Toyota / $0.000 / $0.000 / $0.450 / $0.580
Other Japanese / $0.000 / $0.854 / $0.870 / $0.328
South Korean / $0.063 / $1.350 / $0.700 / $1.000
European / $6.271 / $2.994 / $11.770 / $4.161
Indian / $0.000 / $0.000 / $0.000 / $1.000
Chinese / $2.584 / $9.592 / $2.042 / $0.803
Other / $0.353 / $0.000 / $0.000 / $0.000
Total / $12.779 / $17.112 / $24.136 / $16.130
TABLE 8
TOTAL WORLDWIDE INVESTMENT ANNOUNCEMENTS
BY COUNTRY OF INVESTMENT
(Canadian Dollars – In Billions)
Location / Investment Amount
2009 / Investment Amount
2010 / Investment Amount
2011 / Investment Amount
2012
Argentina / $0.519 / $0.000 / $0.170 / $0.000
Brazil / $3.321 / $0.854 / $2.830 / $0.961
Bulgaria / $0.363 / $0.000 / $0.000 / $0.000
Cambodia / $0.062 / $0.000 / $0.000 / $0.000
Canada / $0.094 / $0.000 / $0.000 / $0.180
China / $5.965 / $10.972 / $13.665 / $9.620
Germany / $0.934 / $0.000 / $0.000 / $0.000
India / $0.000 / $0.000 / $2.265 / $0.000
Indonesia / $0.000 / $0.020 / $0.400 / $0.000
Japan / $0.000 / $0.000 / $0.000 / $0.128
Malaysia / $0.000 / $0.000 / $0.000 / $0.080
Mexico / $1.038 / $0.400 / $3.300 / $2.625
Mongolia / $0.000 / $2.900 / $0.000 / $0.000
Philippines / $0.000 / $0.100 / $0.000 / $0.000
Russia / $0.000 / $1.000 / $0.176 / $1.640
South Africa / $0.000 / $0.000 / $0.046 / $0.023
Thailand / $0.000 / $0.866 / $0.000 / $0.358
United States / $0.483 / $0.000 / $1.084 / $0.515
Venezuela / $0.000 / $0.000 / $0.200 / $0.000
Total / $12.779 / $17.112 / $24.136 / $16.130
Source: OAVR
The following discussion will provide additional detail on major assembler investment announcements by company during 2012. Complete details on all new capacity investment announcements for 2012 appear on pages 24 to 29 of this report. Previous reports in this series provide details on global new capacity investment announcements dating back to 1995.
A. Chrysler
Chrysler,having just achieved two full years of profitability, made two new capacity investment announcements in 2012 totalling $1.64 billion and 165,000 new units of capacity.
Chrysler’s first announcement (see page 24 for complete details) was for $500 million to expand capacity at its plant in Saltillo, Mexico. Chrysler will add 45,000 units of capacity at the plant which currently assembles the Ram series of pickups. A Ram branded version of the Fiat Ducato commercial van will be added to assembly at the plant and Saltillo will become the North American centre for light commercial vehicle assembly in North America.
The second announcement for $1.14 billion, along with Russian partner Sberbank, was for a new assembly plant to be located in St. Petersburg, Russia. The plant will have a capacity of 120,000 units and will assemble Jeep SUVs when opened in 2014.
For 2012, Chrysler’s sales and market share were up in both the U.S. and Canada and Chrysler increased deliveries outside of North American to over 500,000 units. In addition to Russia, Chrysler/Fiatproducts are now being assembled in China.
B. Ford
Fordmade two new capacity announcements in 2012 totalling $1.36 billion and 500,000 additional units of capacity (see page 24). All 500,000 units of capacity added will be in China where Ford is moving fast to catch up with the sales leaders in the world’s largest light vehicle market.
Ford’s first announcement was to add 250,000 units of capacity to their joint venture plant in Chongqing, China at an expense of $600 million. Currently Ford assembles the Mondeo, Focus and S-Max at the plant. To these products Ford will add assembly of the EcoSport and Kuga when the capacity comes on line in 2014.
Ford’s second announcement was for $760 million to build a new assembly plant in Hangzhou, China. The plant will have a capacity of 250,000 units when opened in 2015. The Hangzhou plant will assemble the Ford Escape and EcoSport. When opened, Ford’s light vehicle assembly capacity in China will have increased to 1.2 million units.
Ford’s joint venture plants in China had previously included Mazda but Ford and Mazda have decided to go their separate ways in China. Ford is also looking to expandcapacity in Brazil and to add a plant in Russia.
C. General Motors
General Motors, exhibiting significant profitability over the past three years, made three new capacity investment announcements during the past year totalling $3.76 billion and 832,000 new units of capacity (see page 25 for complete details). The new capacity is being added in China and Russia.
General Motors, one of the top sellers in China, made two new capacity investments in China. The first investment, involving $2.2 billion and 300,000 units of capacity, was for a new plant to be located in Wuhan, China. This joint venture plant is with GM’s major partner in China, SAIC. The vehicles to be assembled at this plant were not announced. GM’s second investment in China will cost $1.06 billion and add another 400,000 units of capacity in China for GM and is also with SAIC. This assembly plant, which will also assemble engines, will be in Chongqing, China and the products to be assembled at the plant were not announced. When opened, these two new GM plants will increase General Motors’ assembly capacity in China to 1.8 million units.
General Motors also announced a $500 million investment to expand capacity at its plant in St. Petersburg, Russia from 98,000 units to 230,000 units. The St. Petersburg plant assembles the Opel Astra and Chevrolet Cruze. GM is also considering a future truck plant, possibly to be located in Thailand, and GM is also looking to upgrade its plant in Gujarat, India.
D. The Japanese Assemblers
The Japanese assemblers, as a group, made $2.406billion in new capacity investment announcements in 2012 adding 774,000 units of capacity (see pages 25 to 27 for details). Capacity was added in China, Thailand, Japan, Mexico, Canada and the U.S.
Honda. Honda made only one new capacity investment announcement in 2012 for $40 million. Honda announced that it would expand capacity at its plant in Greensburg, Indiana by 50,000 units. Capacity at the plant will grow to 250,000 units. Assembly of the Civic hybrid will be added to assembly of the Civic sedan and Acura ILX and ILX hybrid.
Honda is considering a new plant in China with its joint venture partner, Dongfeng Motor Group, to be tentatively located in Wuhan, China. With plans to increase North American sales to over 2 million units by 2016, Honda will be adding additional new capacity in North America.
Nissan. Nissan made three new capacity announcements in 2012 totalling $1.458 billion. The first announcement was to expand capacity at a joint venture plantwith Dongfeng Motor Co. in Xiangyang, China. Assembly of two Infiniti models will be added to assembly of the Teana and Murano models at the Xiangyang plant. Plant capacity will be increased to 250,000 units. The second China announcement was for $785 million for a new assembly plant with joint venture partner Dongfeng. The plant will be located in Dalian, China and will have a capacity for 150,000 units. The plant will assemble unnamed upscale SUVs, sedans and MPVs. Nissan assembly capacity in China will grow to nearly 1.4 million units.