On Sunday July 25th, an article by Automotive News reported that Japanese automobile manufacturer Nissan plans on spending $600 million in the next three years to upgrade operations at their plant in the city of Aguascalientes. The upgrades will prepare the Aguascalientes plant in Northern Mexico for production of three new low-priced vehicles by 2013. The company expects that 80 percent of these new models will be exported to markets throughout the Americas. Nissan ended 2009 as the top auto company in sales in Mexico and this newest investment re-emphasizes the success that auto companies are having in the region.
This announcement by Nissan is a real testimony to the resiliency of the automotive market in Mexico where the overall economy is still experiencing turmoil. It also speaks to Northern Mexico’s ability to not only sustain an auto company like Nissan, but also provide opportunity for its growth. Aguascalientes lies just outside of the TMASC region, but is close enough to enjoy a mutually beneficial relationship with the cluster. In an article from Bloomberg, Carlos Tavares, executive vice president of Nissan states that “markets in Latin America are booming,” and “most probably [Nissan] will produce 530,000 units in [their] Mexican operations in fiscal 2010, an all-time record.”
Part of the reason for Nissan augmenting their Mexican plants is the strength of the yen. According to the previously mentioned Bloomberg article the yen has “risen against all the world’s major currencies in 2010 and is up about 5 percent against the U.S. dollar and 14 percent against the euro this year.” Consequently, exporting from Japan is no longer as profitable as it once was and Nissan is not the only Japanese car manufacturer affected by the change.
The continued success of the automotive market in Northern Mexico, as exemplified by the Nissan investment, is a critical reminder of how important the TMASC initiative is. Texas and Northern Mexico have abundant opportunities waiting for auto makers everywhere.
Report by: Nathan Tuttle