MAJOR AUTOMOTIVE ASSEMBLER INVESTMENT ANNOUNCEMENTS.DOC

MAJOR AUTOMOTIVE ASSEMBLER INVESTMENT ANNOUNCEMENTS Dr A.J Faria, Co-Director Office of Automotive & Vehicle Research Odette School of Business University of Windsor Windsor, Ontario N9B 3P4 (519) 253-3000, ext 3101 (519) 973-7073 (FAX) E-mail: AD9@UWINDSOR.CA February 2013 INDEX INTRODUCTION WORLDWIDE AUTOMOBILE ASSEMBLER INVESTMENT ANNOUNCEMENTS A Chrysler 11 B Ford 11 C General Motors 12 D The Japanese Assemblers 13 E South Korean Assemblers 15 F Other Assemblers 16 SUMMARY 19 INVESTMENT DETAILS 23 OFFICE OF AUTOMOTIVE & VEHICLE RESEARCH 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 Pete Mateja, CoDirector Office of Automotive and Vehicle Research Odette School of Business 519-253-3000, ext 4943 pmateja@uwindsor.ca A J Faria, Co-Director Office of Automotive and Vehicle Research Odette School of Business 519-253-3000, ext 3101 AD9@uwindsor.ca INTRODUCTION 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 WORLDWIDE AUTOMOBILE ASSEMBLER INVESTMENTS Total worldwide production of light and medium duty vehicles in 2012 was 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 TABLE GLOBAL VEHICLE PRODUCTION BY REGION OF THE WORLD 2012 Region Asia/Pacific Europe North America South America Africa 2017 Units Percent 40,464,564 20,252,228 15,475,654 4,363,587 551,531 49.9% 24.9% 19.1% 5.4% 0.7% 81,107,564 Units Percent 51,477,000 24,036,000 18,291,000 6,109,000 701,000 51.2% 23.9% 18.2% 6.1% 0.7% 100.0% 100,614,000 100.0% Source: OICA and 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 while North 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 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 18,291,000 light and medium vehicles for 2017 will 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, 16.7 million 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 for production figures by country) By historical standards, 2012 was the best North American production year since 2006 From 1997 through 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 2,454,064 units while light vehicle sales in Canada for 2012 were up 5.7% 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 2012 was 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 of over 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 Department of Commerce, the North American OEM parts market for 2012 grew to an estimated $288.1 billion 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 with a percentage breakout in Table 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 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 plants in North America will grow by slightly over 600,000 units; assembly at South Korean were made for China, Mexico and Russia For automotive parts suppliers, it is important to note a few things Vehicle production in North America will grow back to volumes approaching normal pre-downturn levels by 2015 However, what new capacity may be added in North America will be added by the new North American manufacturers, not the Detroit As they continue to grow in capacity, the NNAMs are looking for new supply sources, supply sources that are located close to their new plants While difficult to break into, these are customers well worth pursuing Outside of North America, production will be growing significantly in the Asia/Pacific region (especially in China, India, Indonesia and Thailand), in Eastern Europe (especially Russia, the Czech Republic, Poland, Romania and the Ukraine), in South America (Brazil and Argentina), and with a little growth in the Middle East and Africa Table shows where new capacity investments have been going over the past five years The new capacity announcements shown in Table represent plants that have recently opened or soon will be opening These are the countries where production is and will continue to grow and where the parts market will also be growing As can be seen in Table 9, by far the leading region for new capacity investments in recent years is the Asia/Pacific region with 17,171,500 units of new capacity announced from 2007 to 2012 The leading automotive countries in the region (China and India) essentially have received more new capacity announcements than any of the other regions of the globe Europe, particularly countries in Eastern Europe, and South American have also enjoyed as much or more new capacity investments since 2007 as North America North America has received only 9.6% of all global new capacity announcements since 2007 with most of the new capacity (62.2%) going to 24 Mexico The Asia/Pacific region accounts for 64.9% of all new capacity announcements since 2007! North American parts makers must look to the Chinese and Indian automotive markets and assemblers Major Chinese independents and Indian assemblers such as Geely, Chery, Great Wall Automobile, Nanjing Automobile, Changfeng, ChangAn, Tata, Mahindra & Mahindra and others will be growing their parts purchasing in China, India, Eastern Europe, Latin America and, in the not too distant future, North America For companies most comfortable staying with traditional customers such as General Motors, Ford and Chrysler, you must be ready to move to new geographic markets Future growth in sales from the Detroit will be coming outside of North America Staying with traditional customers in your home market is not going to work TABLE CAPACITY INVESTMENT ANNOUNCEMENTS (UNITS) 2007-2012 – BY GLOBAL REGION REGION SAMPLE COUNTRIES UNITS ASIA/PACIFIC 17,171,500 CHINA INDIA 12,592,000 3,013,000 25 THAILAND 780,000 EUROPE 3,477,000 RUSSIA 2,252,000 POLAND 365,000 ROMANIA 275,000 CZECH REPUBLIC 180,000 NORTH AMERICA 2,543,500 MEXIC0 1,579,000 U.S 844,500 CANADA 120,000 SOUTH AMERICA 2,378,500 BRAZIL ARGENTINA MIDDLE EAST/AFRICA 2,040,000 315,000 884,000 26 DETAILED PLANT INVESTMENT INFORMATION 27 CHRYSLER Announcement Date Description Amount (U.S $) Units Per year Completion Date # of Jobs Where January 2012 Chrysler Group announced an investment of $500 million to expand its plant in Saltillo, Mexico Assembly of the Ram branded version of the Fiat Ducato commercial van for North America will be added to Ram series assembly at the Saltillo plant The Saltillo plant will become the center for production for light-commercial vehicles for Chrysler in North America $500 million Additional 45,000 2013 NA Saltillo, Mexico February 2012 Fiat Spa announced that Chrysler Group LLC along with Russian partner Sberbank will invest $1.14 billion to build a new assembly plant outside of St Petersburg, Russia The plant will have a capacity of 120,000 units and will assemble Jeep sport utility vehicles $1.14 billion 120,000 2014 NA St Petersburg, Russia Amount (U.S $) Units Per year Completion Date # of Jobs April 2012 Ford Motor announced an investment of $600 million to expand capacity at its Changan Ford joint venture facilities in Chongqing, China Ford will add 250,000 additional units of capacity at the Chongqing complex Currently, Ford assembles the Ford Mondeo, Focus and S-Max at the Chongqing complex To this mix of products assembled in Chongqing will be added the all new EcoSport and all new Kuga $600 million Additional 250,000 2014 NA Chongqing, China April 2012 Ford announced an investment of $760 million for a new assembly plant to be located in Hangzhou, China The plant will have a capacity of 250,000 units when opened in 2015 The vehicles to be assembled at this plant will include the Ford Escape (Kuga in China) and Ford EcoSport This new plant will give Ford 1.2 million units of capacity in China $760 million 250,000 2015 NA Hangzhou, China FORD Announcement Date Description Where 24 GENERAL MOTORS Announcement Date Description Amount (U.S $) Units Per year Completion Date # of Jobs April 2012 General Motors announced a $2.2 billion investment in a new plant to be located in Wuhan, China as part of the Shanghai General Motors Co joint venture The plant will have a capacity of 300,000 small and medium passenger cars and SUVs (not identified) The plant will also have significant parts making capacity $2.2 billion 300,000 2014 NA June 2012 General Motors announced an investment of $500 million to expand capacity at its assembly plant in St Petersburg, Russia Capacity at the plant will be increased from 98,000 to 230,000 The plant assembles the Opel Astra sedan and Chevrolet Cruze compact car $500 million Additional 132,000 2015 Additional 1,500 November 2012 General Motors announced an investment of $1.06 billion for a new vehicle and engine assembly plant to be located in Chongqing, China The JV plant with SAIC Motor Corp and Wuling Motors Holdings Ltd will open in 2015 The vehicles to be assembled at the plant were not announced This investment will expand GM’s capacity in China to 1.8 million units $1.06 billion 400,000 2015 NA Amount (U.S $) Units Per year Completion Date # of Jobs $40 million Additional 50,000 2013 Where Wuhan, China St Petersburg, Russia Chongqing, China HONDA Announcement Date July 2012 Description Honda announced an investment of $40 million to add 50,000 units of capacity to its plant in Greensburg, Indiana Total plant capacity will grow to 250,000 units The Civic Hybrid will be added to assembly of the Civic sedan and Acura ILX and ILX Hybrid Additional 300 Where Greensburg, Indiana 25 NISSAN Announcement Date Description Amount (U.S $) Units Per year Completion Date # of Jobs Where May 2012 Nissan announced an expenditure of $315 million to expand capacity at its joint venture plant with Dongfeng Motor Group in Xiangyang, China Two Infiniti models would be added to assembly of the Teana and Murano models at the plant Plant capacity will expand from 130,000 units to 250,000 in 2014 when the expansion is complete $315 million Additional 120,000 2014 NA Xiangyang, China June 2012 Nissan announced an expenditure of $785 million for a new assembly plant with joint venture partner Dongfeng Motor Group Co The plant will be located in Dalian, China and will have a capacity of 150,000 units when opened in 2014 with the ability to expand to 300,000 units The plant will assemble unnamed upscale SUVs, sedans and MPVs $785 million 150,000 2014 NA Dalian, China November 2012 Nissan announced an investment of $358 million for a second assembly plant to be located in Thailand The plant will have a capacity of 150,000 units and will open in 2014 The plant’s first product will be the Navara pickup $358 million 150,000 2014 NA Thailand Amount (U.S $) Units Per year Completion Date # of Jobs TOYOTA Announcement Date Description Where January 2012 Toyota announced an investment of $400 million to expand its plant in Princeton, Indiana The expansion will accommodate the assembly of an additional 50,000 hybrid and gas powered Highlander SUVs and will add 400 jobs $400 million Additional 50,000 2013 Additional 400 Princeton, Indiana March 2012 Toyota announced an investment of $80 million to expand capacity at its plant in Woodstock, Ontario Plant capacity will be expanded from 150,000 units to 200,000 The Woodstock plant assembles the RAV4 SUV $80 million Additional 50,000 2013 Additional 400 Woodstock, Ontario $100 million Additional 30,000 2014 Additional 400 Cambridge, Ontario July 2012 Toyota announced an investment of $100 million to expand capacity to assemble the Lexus RX350 luxury crossover and a hybrid version of the vehicle at its plant in Cambridge, Ontario Lexus capacity at the plant will increase by 30,000 units to 102,000 This will expand Toyota’s capacity in Canada to 500,000 vehicles and Toyota employment at its plants to 7,300 workers 26 OTHER JAPANESE Announcement Date Description Amount (U.S $) Units Per year Completion Date # of Jobs Where May 2012 Subaru, a unit of Fuji Heavy Industries Ltd., announced an expansion of its plant in Lafayette, Indiana to expand assembly of its Outback crossover and Legacy sedan and wagon The $75 million expansion will boost plant capacity from 170,000 to 200,000 units The Lafayette plant also assembles the Tribeca SUV and the Toyota Camry $75 million Additional 30,000 2014 Additional 100 Lafayette, Indiana August 2012 Isuzu Motors Ltd announced an investment of $128 million in a new plant to be located in Nanchang, Japan The plant will have a capacity of 100,000 units Jiangling Motors Corp of China will be a partner in the venture and engines will be supplied by Qingling Motors Group The plant will assemble commercial trucks $128 million 100,000 2014 NA Nanchang, Japan November 2012 Mazda announced that capacity at its currently under construction plant in Guanajuato, Mexico will be expanded Capacity at the plant will be expanded from 140,000 to 190,000 units The additional capacity will be used to assemble 50,000 new subcompact vehicles for Toyota off of the Mazda2 platform Additional $125 million Additional 50,000 2015 NA Guanajuato, Mexico SOUTH KOREAN ASSEMBLERS Announcement Date July 2012 Description Kia Motors announced a new assembly plant with joint venture partners Dongfeng Motor Corp and Jiangsu Yueda Investment Company The plant, located in Jiangsu province, will have a capacity of 300,000 units when opened in 2014 Kia assembly capacity in China will grow to 720,000 units Amount (U.S $) Units Per year Completion Date # of Jobs $1 billion 300,000 2014 NA Where Jiangsu province, China 27 EUROPEAN ASSEMBLERS Announcement Date Description Amount (U.S $) Units Per year Completion Date # of Jobs Where February 2012 Daimler AG and Chinese partner Beiqi Foton Motor Co announced a $1 billion investment in a new plant to assemble medium and heavy-duty commercial trucks The plant will have a capacity of 160,000 trucks and will be located in Beijing $1 billion 160,000 2014 NA Beijing, China April 2012 Volkswagen Group announced a new assembly plant for its premium Audi brand to be located in San Jose Chiapa, Mexico The plant will have a capacity of 150,000 units when opened in 2016 and will assemble the Audi Q5 SUV The new plant will be near to Volkswagen’s plant (Beetle and Jetta) in Puebla, Mexico $2 billion 150,000 2016 NA San Jose Chiapa, Mexico September 2012 Daimler AG and joint venture partner Beijing Automotive Group announced the second phase of its expansion of assembly facilities in Beijing, China The new Beijing Benz Automotive Co plant will assemble A class, B class, and GLA SUV compact vehicles on the same MFA platform Capacity at the Beijing complex will grow from 100,000 units to 300,000 $900 million Additional 200,000 2014 NA Beijing, China $261 million 30,000 2014 1,000 Joinville, Brazil Amount (U.S $) Units Per year Completion Date # of Jobs $1 billion 130,000 2014 NA October 2012 BMW announced a new assembly plant to be located in Joinville, Brazil The plant will have a capacity of 30,000 vehicles when opened in 2014 and will employ 1,000 workers The vehicle(s) to be assembled in the plant were not announced but it could be the 3-series INDIAN ASSEMBLERS Announcement Date June 2012 Description Jaguar Land Rover, owned by Tata Motors Ltd., announced a joint venture agreement with Chery Automobile Co of China to build an assembly plant in Changshu, China The plant will have an assembly capacity of 130,000 units when opened in 2014 and will assemble Jaguar and Land Rover vehicles Where Changshu, China 28 CHINESE ASSEMBLERS Announcement Date Description Amount (U.S $) Units Per year Completion Date # of Jobs Where July 2012 Chery Automobile Co announced plans for an assembly plant in Malaysia The plant will supply vehicles to Malaysia, Thailand, Indonesia, Sri Lanka, India and Pakistan $80 million 10,000 2014 NA Malaysia September 2012 Chinese truckmaker Beiqi Foton Motor Co announced an investment of $300 million for a new truck assembly plant to be located in Camacari, Brazil $300 million 30,000 2013 NA Camacari, Brazil November 2012 Chery Automobile Co announced an investment of $400 million for a new assembly plant to be located in Brazil The plant will have a capacity of 150,000 units when opened in late 2013 The first vehicle to be assembled at the plant in Sao Paulo will be the subcompact Chery Celer $400 million 150,000 2013 NA Sao Paulo, Brazil November 2012 Beijing Automotive Industry Holding Corp announced a joint venture plant with the Industrial Development Corp of South Africa The plant will assemble minibus taxis The plant will be located in Springs, South Africa and will be able to assemble 10,000 minibuses per year $23 million 10,000 2014 NA Springs, South Africa 29 INFORMATION SOURCES A Associations American Association of International Automakers American Automobile Manufacturers Association Association of Indonesian Automotive Industries Association of International Automobile Manufacturers of Canada Automotive Industries Association of Canada Automotive Resources Asia Ltd Japan Automobile Manufacturers Association Korean Automobile Manufacturers Association Mexican Automotive Industry Association Motor Vehicle Manufacturers Association of Canada Motor Vehicle Manufacturers Association of the U.S National Association of Automotive Vehicle Makers of Brazil Original Equipment Suppliers Association The Alliance of Automobile Manufacturers B Publications Auto Age Auto Authority 30 Auto Data Auto Vision Autofutures Automobile Automobile Topics Automobile Year Automotive Business News Automotive Components Analyst Automotive Engineering Automotive Industries Automotive International Automotive Manufacturing Automotive News Automotive News Europe Automotive News International Canadian Auto World Early Warning Report (AutoFacts) Europe Automotive Insights Far Eastern Economic Review The Globe and Mail Insights (Automotive Industries) The Japan Automotive Digest Journal of Asian Business 31 Korean Auto Industry Outlook Vehicle News Ward’s Automotive Reports Ward's Auto World Ward's Automotive Yearbook C Research Organizations and Other Sources A T Kearney, Inc AutoFacts International, Inc Automotive Branch, Industry Canada The Automotive Consulting Group Automotive Industry Action Group The Baan Company DRI/McGraw Hill ELM International Global Insight IRN, Inc J D Power and Associates Korean Auto Research Inc Office for the Study of Automotive Transportation - University of Michigan R L Polk & Co Ward's Communication 32 D Web Sites Monitored All Things Automotive Auto Directory Autofacts Auto Home Page Automotive Industries Automotivedigest AutoNews.com Auto Source Autos Insider BMW DaimlerChrysler Corporation Detroit News Auto Talk Ford Motor Company General Motors Corporation Honda Hyundai Kia Land Rover Mercedes-Benz Mitsubishi Motors Corporation Nissan 33 Saab Society of Automotive Engineers Strategis Toyota Volkswagen Volvo Ward's Communications 34 ... Year Automotive Business News Automotive Components Analyst Automotive Engineering Automotive Industries Automotive International Automotive Manufacturing Automotive News Automotive News Europe Automotive. .. Wardsauto, AutosInsider, Automotivedigest and The Auto Directory; (4) Contacts with major automotive associations; (5) Ongoing contacts with major automotive publishers and automotive research organizations;... (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