Covering the Industry's Economic, Legal & Financial Issues

MexicanAutomotive covers the Mexican automotive and auto parts industries, and is published monthly in English and Spanish. MexicanAutomotive reports on general Mexican automotive industry topics, as well as economic, financial and legal issues affecting the North American automotive industry. Published by Cacheaux, Cavazos & Newton (CCN), subscriptions to MexicanAutomotive are free. CCN is an international law firm with offices in Texas and Mexico. The firm provides legal services in many practice areas including Automotive law to clients doing business in the NAFTA region.

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Nissan Mexico Achieves Success in Brazil E-mail

Nissan Mexico Achieves Success in Brazil

The popular 2015 Nissan Sentra has enjoyed spectacular success in Brazil. The vehicle is manufactured in Mexico at the new Nissan Aguascalientes A2 plant and is exported to more than 23 countries abroad, including the United States. Sales in Brazil increased 116% over the prior year. In 2014, this medium sized sedan took fourth place among all models sold in Brazil and is now available with new features such as leather seats in the immediate model, in place of fabric seats, which offer a higher quality driving experience. The fully equipped model now features a sunroof. The 2015 Nissan Sentra sold in Brazil retails for between $28,308 in its standard version and $33,564 in its fully equipped sunroof model. The intermediate model sells for $31,091, and the most equipped model without a sunroof is available for $32,990. The new Nissan Sentra has conquered many Brazilian consumers owing to its modern design, complete package of features and competitive price. In addition to being the highest rated vehicle when compared to other similar models in competition, the new Nissan Sentra 2015 was chosen by the team of Autoesporte magazine, of the Globo publishing group in Brazil, as the best option among medium sized sedans in its ranking "Which 2014 models should you buy?", an annual guide orienting consumers making auto purchase decisions. The most fully equipped 2015 Nissan Sentra was recently selected as the "Best Buy between R$60,000 reales ($26,631 dollars) and R$80,000 reales ($35,509 dollars) by the Quatro Rodas magazine in its April edition, featuring "Best 2014 Buys", which is published annually.

 

 
Volkswagen's Continued Presence in Puebla E-mail

Volkswagen's Continued Presence in Puebla

Volkswagen's manufacturing facility in Puebla employs 16,500 workers. It operates every day of the week except Sunday, which the company uses to make manufacturing adjustments and perform maintenance. The factory produced 2,500 autos per day, including the Classic, Jetta A6, Beetle and Cabrio convertible models. From such production, 20% will be sold in Mexico's domestic market and 80% exported abroad. The company's enormous plant occupies 310 hectares (approximately 7,66 acres) and features 100 different warehouses and buildings which occupy an additional 200 hectares (approximately 540 acres). As an aside, the plant holds the Guinness World Record for the preparation of 12,600 chiles en nogada, a Mexican culinary favorite originated in the kitchens of Puebla.

Production of the New Volkswagen Golf

The production process of Volkswagen's new Golf begins with the stamping of metal parts, which is 100% automated using presses created by the German company Müller Weingarten, each with the capacity to handle 40 tons. The stamping presses create 7,600 tons of pressure and can produce up to 66 pieces per minute. From the stamping area, the manufacturing process continues to assembly of the chassis and body, where 422 robots made by the German company Kuka perform 85% of the work, while the rest is finished by the company’s employees, who are better able to access tight areas in the vehicle assembly process. The company uses laser welding to manufacture critical parts quickly and precisely, with weld marks that are almost undetectable to the human eye. The laser welders can weld 30 centimeters in three seconds and form up to three different pieces. These high tech welding processes are used only on key points, as such process consumes significant energy. The rest of the welding process utilizes other welding and soldering techniques, such as urethane, which carries a warranty of ten years.

Once the body and chassis of the vehicle has taken form, it is transferred to the paint booth, where the vehicle is washed and receives a special solution to avoid rusting, and a primer coat in preparation for the final application of paint. Once the vehicle has been painted, an oil based transparent coating is applied. The painting process, while very interesting, is the most time consuming part of the whole production line, taking 12 to 13 hours until a vehicle emerges from drying ovens. The final body then goes to the assembly area where all of the components are added, including the drive train. The most important step in this part of the manufacturing is the installation of the drive train. Timing is critical at this point of the process, as all suppliers must deliver their components directly to the production line just-in-time and in a pre-ordained sequence. This is not an easy task to complete, as more than 1,500 parts combinations exist, and all the assembly must be completed at the same time, through finalizing installation of the ignition switch. In fact, some of the vehicles are destined for export to the 16 countries in which the steering wheel is on the right side of the vehicle. Once the auto's assembly is complete, it receives ten liters of fuel in order to pass a series of tests, which are conducted by 120 drivers, each of whom specializes in only one model. The tests include completing a 3.5 kilometer circuit over different surfaces and passing through a water chamber. In terms of volume, the Puebla plant is the largest automotive production facility in North America.

 

 
Automotive Statistics E-mail

Automotive Statistics

· July 2014 light vehicle sales in Mexico rose 11% over the same month in 2013;

· Mexico exported 231,934 light vehicles in July 2014, an historic high for any previous July, representing growth of 11.2% for year over year exports;

· Mexico produced 259,634 vehicles in July 2014, which is 8.5% higher than the number for July, 2013;

· In the U.S., 9,552,800 light vehicles were sold within the first seven months of 2014, representing a 4.9% increase over the same period for the prior year.

 

Auto Sales in the Mexican Domestic Market

96,211 light vehicles were sold in Mexico during July of 2014, showing an 11% increase over the same month in 2013. However, cumulative growth over the first seven months of the year was only 1.3% higher over the same period of the prior year. Total 2014 vehicles sold of 596,571 puts the Mexican auto industry at its highest level in ten years. Of all domestic autos sold in Mexico during the January-July 2014 period, 47.1% were vehicles manufactured in Mexico, while 52.9% consisted of vehicles manufactured abroad.

Total Domestic Production

Manufacturing of light vehicles reached historic highs, in both the month of July, and for the January – July 2014 period. July 2014 saw 259,634 light vehicles manufactured in Mexico, which is 8.5% higher than the 239,311 units manufactured in July 2013. Cumulative January - July production of 1,857,228 units represents a 7.5% increase over the same period in 2013. Of such total production, 83.1% of units were for export and the remaining 16.9% were manufactured for sale in the Mexican domestic market.

Auto Exports

Mexican auto exports also reached historical highs, both in the month of July 2014 and for the January – July 2014 period. Mexico exported 231,934 light vehicles during the month of July, representing a 20.2% increase over the same month in 2013. The cumulative January – July period showed 1,505,505 units sold throughout the world, which is an 11.2% increase over the first seven months of 2013. Such auto exports were distributed as follows:

Mexican Market Share

Nissan led Mexican auto sales during June – July period with five of its models landing on the ten most popularly sold vehicles. General Motors came in second, with Volkswagen placing third. In terms of sales volume and market share, Nissan came in first place with 25.35%, General Motors followed at 19.35%, with Volkswagen (14.9%), Ford, (6.3%), Chrysler and Toyota (5.7%) each, and Honda (4.9%) rounding out the numbers.

 

 
The First Automotive University in Mexico E-mail

The automotive industry is so important in Mexico that the country’s first automotive university is set to be constructed in Queretaro, a major city located two and a half hours north of Mexico City. Mr. Jose Eduardo Calzada Rovirosa, Queretaro’s current governor, announced that the new academic project is 70% complete, and that such facility hopes to begin operating in September of this year. The university will have the capacity to host 1,000 students. It will be located on an approximate one acre site and will have eight laboratories and 16 classrooms. According to Governor Calzada Rovirosa, in September the new automotive university plans to open with an inaugural class of between 30 and 50 students during its first phase, at a cost of 30 million pesos (approximately 2.5 million dollars). He also stated that the new university will launch an information campaign directed at young students who are interested in the automotive industry, which will include the various academic disciplines and programs currently demanded in the labor market. The Automotive University of Queretaro is being constructed in the municipality of El Marques, which neighbors the city of Queretaro. The law firm of Cacheaux, Cavazos & Newton, which produces this publication, has had an office in the city of Queretaro for many years, in a city that will continue to be important for the automotive industry and the creation of new business resulting from this new academic center.

 
The Nissan Leaf (100% Electric) on Sale in Mexico E-mail

 

Nissan became the first automaker to offer a 100% electric vehicle for sale in Mexico. Such vehicle appears to be the automobile of the future. To date, more than 115,000 units have been sold throughout the world. With this, Nissan confirms its position as a market leader in the production of electric vehicles. It also confirms the company’s commitment to promote zero emissions as it plans to open charging stations throughout Mexico’s territory. The presale of these electric vehicles has already started, and it is expected that the Nissan Leaf will arrive in the marketplace around the end of June or beginning of July. The model to be sold in Mexico will be unique and some of its features include the addition of an electric piece that would allow charging to occur immediately after drivers decelerate, as well as a fast-charging port which will allow for 80% of the battery to be charged in only 30 minutes. The new model has leather seats, a touch-screen display and many other features. The reaction of drivers testing electric vehicles has been interesting. In addition to being enjoyable, and non-contaminating, the almost total silence of the driving experience has been fascinating to many drivers. As previously published in MexicanAutomotive™, Nissan and the state of Morelos have created the first electric automobile corridor in Latin America, which is located between Mexico City and Cuernavaca. Additional plans to develop recharge zones throughout Mexico City are pending, which would be located in the Roma, Del Valle, Coyoacan, Polanco, Santa Fe, Satelite, Altavista and San Angel neighborhoods. In addition to Nissan’s plans to make its electric vehicles match the needs of consumers, such vehicles must also be reliable. Jorge Vallejo, Director of External Relations for Nissan Mexico, Latin America and the Caribbean stated that the company understands the anxiety that could result when a driver of an electric vehicle is unable to locate charging infrastructure in a given city, making it even more important for each driver to be able to charge their vehicle at home.

 
Production of South Korean (KIA) Autos in Mexico E-mail

The South Korean automaker KIA Motors has announced plans to construct a plant in Mexico, according to two sources familiar with the proposed project. If the plan goes forward, this will be KIA’s first manufacturing plant in Mexico. Production would begin approximately 21 months after initiating construction, according to such sources. The plant would be constructed in the city of Monterrey, Nuevo Leon. According to sources, the new plant would have a capacity of 300,000 vehicles per year, and two separate compact vehicles would be produced initially. It is thought that the construction of KIA’s plant in the industrial city of Monterrey, just two hours from the U.S. border, would assist the automaker with meeting demand in the United States, where KIA operates its only North American plant at full capacity in West Point, Georgia. This information is not yet official, and sources indicate that final plans have not yet been made public. Final confirmation from the South Korean company will need to come from Chung Mong-koo, the president of Hyundai Motors and its affiliate KIA. It has also been rumored that KIA desires to avoid expanding too quickly to avoid quality control problems that have affected its Japanese rival Toyota Motor Corp., when such latter company grew rapidly during the decade of 2000-2010. If this new project is confirmed, it would be excellent news for Mexico’s automotive industry.

 
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