TOKYO (Dec. 20, 2011)—Mazda Motor Corp. has just started construction of an assembly plant in Mexico, but it is already weighing increased capacity with an eye toward shipping cars north of the border.
CEO Takashi Yamanouchi said the company is considering boosting output at its upcoming factory in Salamanca, in central Mexico, to 210,000 units a year by adding a third shift.
The original plan called for two shifts with annual capacity of 140,000 units.
The factory is scheduled to open in 2013 and make the Mazda2 small car and Mazda3 sedan. Mazda had planned to ship those cars to Latin America.
It now wants to sell them in the U.S. as well to help it offset the exchange-rate penalty it suffers on vehicles that it exports from Japan.
But Mazda needs to lower its cost base in Mexico more than anticipated because the U.S. market is more price sensitive than Latin America, Yamanouchi said.
Achieving larger volumes could help. Yamanouchi said expanding output would increase labor costs but deliver more vehicles with minimal capital outlay.
“For products destined for North America, cost is a bigger issue,” he said. “With two shifts, it is 140,000 units. But if we add a third, we can increase capacity to 210,000.”
Mazda has not decided about expanding capacity.
Yamanouchi said his company is trying to align local suppliers so products built there will meet the North American Free Trade Agreement's local content requirements for barrier-free trade among Mexico, the U.S. and Canada. Mazda broke ground for the Mexican factory in October.