MAJOR AUTOMOTIVE - Canadian Manufacturing



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|MAJOR AUTOMOTIVE |

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|ASSEMBLER INVESTMENT |

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|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

INTRODUCTION 1

WORLDWIDE AUTOMOBILE ASSEMBLER

INVESTMENT ANNOUNCEMENTS 2

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

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 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 1.

| |TABLE 1 | |

|GLOBAL 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% |

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| |81,107,564 |100.0% |100,614,000 |100.0% |

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|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 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 18,291,000 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 2 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 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 to the $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 been China ($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.

Table 7 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 of The 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, Mexico and Russia.

TABLE 2

NORTH AMERICAN VEHICLE PRODUCTION (2012)

Percent

Country Unit Production Change

United States 10,140,812 +19.5%

Canada 2,454,064 +15.4%

Mexico 2,880,778 +12.6%

Total 15,475,654 +17.6%

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Source: Automotive News Data Center

TABLE 3

NORTH AMERICAN SALES FORECAST (2013)

Sales

Country Forecast (Units)

U.S. 15,534,000

Canada 1,742,000

Mexico 1,064,000

18,340,000

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Source: OAVR

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|TABLE 4 |

|NORTH AMERICAN LIGHT VEHICLE PRODUCTION FORECAST (units) |

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| |DETROIT 3 |

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|TABLE 5 |

|NORTH AMERICAN LITE VEHICLE PRODUCTION FORECAST (percent) |

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| |DETROIT 3 |

TABLE 6

NORTH AMERICAN LIGHT VEHICLE SALES MARKET SHARE

| |2008 |2009 |2010 |2011 |2012 |

|Detroit 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 |2012 |

|Chrysler |$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 |

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|Total |$12.779 |$17.112 |$24.136 |$16.130 |

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|TABLE 8 |

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|TOTAL WORLDWIDE INVESTMENT ANNOUNCEMENTS |

|BY COUNTRY OF INVESTMENT |

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|(Canadian Dollars – In Billions) |

| |Investment Amount |Investment Amount |Investment Amount |Investment Amount |

| |2009 |2010 |2011 |2012 |

|Location | | | | |

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|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 |

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|Total |$12.779 |$17.112 |$24.136 |$16.130 |

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|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/Fiat products are now being assembled in China.

B. Ford

Ford made 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 expand capacity 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 $2.406 billion 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 plant with 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.

The third Nissan announcement was for a new plant to be located in Thailand. The plant will have a capacity of 150,000 units when opened in 2014 and the first vehicle to be assembled at the plant will be the Navara pickup. Nissan is also looking at the possibility of a new assembly plant to be located in Mexico and moving Infiniti assembly from Japan to Mexico.

Toyota. Toyota made three small new capacity announcements in 2012 totalling $580 million and 130,000 units of capacity. All of Toyota’s new capacity announcements were for North America.

Toyota announced expansions at both of their Canadian assembly plants. Toyota announced that they will expand capacity at their plant in Woodstock by 50,000 units raising Woodstock capacity to assemble the RAV4 SUV to 200,000 units. Toyota also announced that they will expand capacity in Cambridge by 30,000 units. The expansion will accommodate 30,000 additional units of the Lexus RX350 including a hybrid version of the RX350. The Woodstock and Cambridge expansions will increase Toyota capacity in Canada to over 500,000 units.

Toyota’s third announcement was to expand capacity at its Princeton, Indiana plant by 50,000 units. The Princeton expansion will accommodate additional assembly of the Highlander SUV including a hybrid version of the Highlander. In total, Toyota will be adding 1,200 assembly jobs in Canada and the U.S. through these expansions.

Other Japanese Assemblers. Other Japanese assemblers made three small expansion announcements totaling $328 million and 174,000 units of capacity.

Isuzu Motors Ltd. announced an investment of $128 million for a new plant to be located in Nanchang, Japan. The plant will have 100,000 units of capacity when opened in 2014 and will assemble commercial trucks. Mazda announced an additional expenditure of $125 million to add 50,000 units of capacity to a plant currently under construction in Guanajuato, Mexico. Guanajuato capacity will be expanded from 140,000 units to 190,000 and the additional capacity will be used to assemble a new subcompact vehicle for Toyota. Finally, Subaru announced an expansion of 30,000 units to their plant in Lafayette, Indiana. The added capacity will be used to assemble additional Outback crossovers and Legacy sedans and wagons. Lafayette capacity will be expanded to 200,000 units.

Mitsubishi Motors Corp. is said to be exploring additional assembly capacity in Russia and Thailand. Mazda is looking to expand capacity in Eastern Europe and is talking with Sollers in Russia. Isuzu has purchased land in Alabama with the intention of building a light truck assembly plant when market conditions warrant.

E. South Korean Assemblers

Kia made one new capacity announcement in 2012 (see page 27) totalling $1 billion. Kia announced a new joint venture assembly plant (with Dongfeng Motor Corp. and Jiangsu Yueda Investment Company) to be located in Jiangsu province, China. The plant will have a capacity of 300,000 units when opened in 2014 and will be Kia’s third plant in China. Unnamed vehicles suitable for the local market will be assembled at the plant.

Hyundai has expressed interest in new capacity in Russia, the Ukraine and Thailand while Kia is interested in expanding capacity in Slovakia. With Hyundai/Kia pushing output at their two plants in Alabama and Georgia to the limit, Hyundai could be interested in another plant in North America.

F. Other Assemblers

The remaining world assemblers announced new investments totalling $5.964 billion in 2012 (see pages 28 and 29) and 870,000 units of new capacity.

European Assemblers. European assemblers made $4.161 billion in new capacity investment announcements in 2012. Daimler made two announcements totalling $1.9 billion; Volkswagen made one announcement totalling $2 billion; and BMW made one announcement totalling $261 million.

Daimler’s two new announcements both involved plants to be located near Beijing, China. The first plant will be with joint venture partner Beiqi Foton Motor Co. and will be a new plant to assemble medium and heavy-duty commercial trucks. Capacity at the plant will be 160,000 trucks when opened in 2014. Daimler’s second expansion will be with joint venture partner Beijing Automotive Group and will expand capacity at the current Beijing Benz plant from 100,000 to 300,000 units. The added capacity will be used to assemble A class, B class GLA SUV compact vehicles from the MFA platform.

Volkswagen Group announced a new plant 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. BMW announced a new plant to be located in Joinville, Brazil. The plant will have a capacity of 30,000 units and it is likely that the first vehicle to be assembled at the plant will be the BMW 3-Series.

In other European assembler news, Volkswagen is looking to expand capacity in Russia and further expand in China while Porsche is considering production in both the U.S. and China.

Indian Assemblers. Jaguar Land Rover, owned by Tata Motors Ltd. of India, announced a $1 billion joint venture plant with Chery Automobile Co. of China for a new plant to be located in Changshu, China. The plant will have an assembly capacity of 130,000 units and will assemble both Jaguar and Land Rover vehicles. Jaguar Land Rover is also examining the possibility of a plant to be located in Saudi Arabia.

Chinese Assemblers. Chinese assemblers, a fast growing force in the global automotive industry, made four new capacity investment announcements in 2012 totalling $803 million. These announcements understate the importance of Chinese new capacity investments. For all new joint venture investments made in China, credit has been given to the Detroit 3, Japanese, South Korean, European or Indian joint venture partner. The Chinese announcements given here represent only new capacity investments from Chinese light vehicle assemblers that do not involve a joint venture partner.

Chery Automobile Co. made two new capacity announcements. The first announcement ($400 million) was for a new plant to be located in San Paulo, Brazil. The plant will have a capacity of 150,000 units and will first assemble the Chery Celer. The second announcement, for $80 million, is for a new assembly plant to be located in Malaysia that will have a 10,000 unit capacity.

Beiqi Foton Motor Co. made one announcement for a new truck plant to be located in Camacari, Brazil. The plant will have a capacity of 30,000 units and will assemble commercial trucks. Beijing Automotive Industry Holding Corp. announced a new plant to be located in Springs, South Africa. The plant will have a capacity of 10,000 units and will assemble minibuses.

Clearly, as the automotive market in China continues to grow and continues to be the largest automotive market in the world, we will see ongoing capacity investments in China and more capacity being added by the Chinese automotive OEMs. The Chinese OEMs are generally supported by their provincial governments, support which allows them to invest in technology and capacity beyond what their sales numbers might suggest.

A number of observations can be made when examining the capacity building investment announcements of the major global automotive assemblers during 2012 and some current and forecasted industry production and sales data.

First, worldwide production of light and medium vehicles in 2012 was approximately 81.1 million units, up 6.6% over 2011. The Office of Automotive & Vehicle Research is forecasting worldwide production of light and medium vehicles to exceed 100 million units by 2017 with over 11 million units of this growth, or nearly 86% of the growth, occurring outside of North America. While some new assembly plants will be built in North America in the years ahead (primarily by the Japanese, South Korean, and European assemblers), real growth in assembly capacity will be coming in other parts of the world.

Second, light vehicle assembly in North America increased by 17.6% in 2012 to 15,475,654 units. This figure represents the highest vehicle assembly in North America since 2006.

Third, vehicle assembly and sales in China continue to grow. China has been, for several years, the largest vehicle sales market in the world (having passed the U.S.) and the largest assembly country in the world (having passed Japan). The Asia/Pacific region now accounts for 49.9% of global vehicle assembly (up from less than one-third in 2004) and will grow to 51.2% of vehicle assembly in 2017. North America accounted for 19.1% of global assembly in 2012 (down from 32.2% in 1995).

Fourth, light vehicle production in Canada grew by 15.4% in 2012 to 2,454,064 units with sales growing by 5.7% to 1,677,990 units. Light vehicle assembly in the U.S. grew by 19.5% to 10,140,812 units while assembly in Mexico was up 12.6% in 2012 to 2,880,778 units. North American light vehicle sales are expected to grow about 7.1% in 2013 to 18,340,000 units. The Japanese, European and South Korean assemblers will account for a slightly larger share of North American sales and production in 2013.

Fifth, light vehicle assembly in North America will exceed 17 million units by 2015 and will approach all time high North American production levels by 2017.

Sixth, the Detroit 3 accounted for nearly 60 percent of vehicle assembly in North America in 2011 but this is expected to decline to about 51 percent by 2015.

Seventh, nearly 60% of the light vehicle production growth in North America from 2012 to 2017 will come from the Japanese assemblers.

Eighth, total new capacity investment announcements for 2012 declined to $16.130 billion from $24.136 billion in 2011.

Ninth, the countries receiving the largest capacity investment announcements in 2012 were China, Mexico, Russia and Brazil.

Tenth, there were two new capacity investment announcements for Canada in 2012 totalling $180 million and 80,000 units (Toyota in Cambridge and Woodstock), three new announcements for the U.S. (totalling 124,000 units) and three new capacity announcements for Mexico (totalling 245,000 units).

Eleventh, China accounted for 59.6% of all the investment announcements made during 2012.

Twelfth, the new capacity announcements from the Detroit 3 in 2012 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 3. 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 9 shows where new capacity investments have been going over the past five years. The new capacity announcements shown in Table 9 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 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 3 will be coming outside of North America. Staying with traditional customers in your home market is not going to work.

|TABLE 9 |

|CAPACITY INVESTMENT ANNOUNCEMENTS (UNITS) |

|2007-2012 – BY GLOBAL REGION |

|REGION |SAMPLE COUNTRIES | |UNITS |

|ASIA/PACIFIC | | |17,171,500 |

| |CHINA |12,592,000 | |

| |INDIA |3,013,000 | |

| |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 |

| |MEXIO |1,579,000 | |

| |U.S. |844,500 | |

| |CANADA |120,000 | |

|SOUTH AMERICA | | |2,378,500 |

| |BRAZIL |2,040,000 | |

| |ARGENTINA |315,000 | |

|MIDDLE EAST/AFRICA | | |884,000 |

DETAILED PLANT

INVESTMENT

INFORMATION

CHRYSLER

|Announcement Date |Description |Amount |Units |Completion |# of Jobs |Where |

| | |(U.S. $) |Per year |Date | | |

|February 2012 | |$1.14 billion |120,000 |2014 |NA |St. Petersburg, Russia |

| |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. | | | | | |

FORD

|Announcement Date |Description |Amount |Units |Completion |# of Jobs |Where |

| | |(U.S. $) |Per year |Date | | |

|April 2012 | |$760 million |250,000 |2015 |NA |Hangzhou, China |

| |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. | | | | | |

GENERAL MOTORS

|Announcement Date |Description |Amount |Units |Completion |# of Jobs |Where |

| | |(U.S. $) |Per year |Date | | |

|June 2012 | |$500 million |Additional |2015 |Additional |St. Petersburg, Russia |

| |General Motors announced an investment of $500 million to expand capacity at its assembly | |132,000 | |1,500 | |

| |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. | | | | | |

|November 2012 | |$1.06 billion |400,000 |2015 |NA |Chongqing, China |

| |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. | | | | | |

HONDA

|Announcement Date |Description |Amount |Units |Completion |# of Jobs |Where |

| | |(U.S. $) |Per year |Date | | |

NISSAN

|Announcement Date |Description |Amount |Units |Completion |# of Jobs |Where |

| | |(U.S. $) |Per year |Date | | |

|June 2012 | |$785 million |150,000 |2014 |NA |Dalian, China |

| |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. | | | | | |

|November 2012 | |$358 million |150,000 |2014 |NA |Thailand |

| |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. | | | | | |

TOYOTA

|Announcement Date |Description |Amount |Units |Completion |# of Jobs |Where |

| | |(U.S. $) |Per year |Date | | |

|March 2012 | |$80 million |Additional |2013 |Additional |Woodstock, Ontario |

| |Toyota announced an investment of $80 million to expand capacity at its plant in | |50,000 | |400 | |

| |Woodstock, Ontario. Plant capacity will be expanded from 150,000 units to 200,000. The | | | | | |

| |Woodstock plant assembles the RAV4 SUV. | | | | | |

|July 2012 | |$100 million |Additional |2014 |Additional |Cambridge, Ontario |

| |Toyota announced an investment of $100 million to expand capacity to assemble the Lexus | |30,000 | |400 | |

| |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. | | | | | |

OTHER JAPANESE

|Announcement Date |Description |Amount |Units |Completion |# of Jobs |Where |

| | |(U.S. $) |Per year |Date | | |

|August 2012 | |$128 million |100,000 |2014 |NA |Nanchang, Japan |

| |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. | | | | | |

|November 2012 | |Additional |Additional |2015 |NA |Guanajuato, Mexico |

| |Mazda announced that capacity at its currently under construction plant in Guanajuato, |$125 million |50,000 | | | |

| |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. | | | | | |

SOUTH KOREAN ASSEMBLERS

|Announcement Date |Description |Amount |Units |Completion |# of Jobs |Where |

| | |(U.S. $) |Per year |Date | | |

EUROPEAN ASSEMBLERS

|Announcement Date |Description |Amount |Units |Completion |# of Jobs |Where |

| | |(U.S. $) |Per year |Date | | |

|April 2012 | |$2 billion |150,000 |2016 |NA |San Jose Chiapa, Mexico |

| |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. | | | | | |

|September 2012 | |$900 million |Additional |2014 |NA |Beijing, China |

| |Daimler AG and joint venture partner Beijing Automotive Group announced the second phase | |200,000 | | | |

| |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. | | | | | |

|October 2012 | |$261 million |30,000 |2014 |1,000 |Joinville, Brazil |

| |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 |Description |Amount |Units |Completion |# of Jobs |Where |

| | |(U.S. $) |Per year |Date | | |

CHINESE ASSEMBLERS

|Announcement Date |Description |Amount |Units |Completion |# of Jobs |Where |

| | |(U.S. $) |Per year |Date | | |

|September 2012 | |$300 million |30,000 |2013 |NA |Camacari, Brazil |

| |Chinese truckmaker Beiqi Foton Motor Co. announced an investment of $300 million for a new| | | | | |

| |truck assembly plant to be located in Camacari, Brazil. | | | | | |

|November 2012 | |$400 million |150,000 |2013 |NA |Sao Paulo, Brazil |

| |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. | | | | | |

|November 2012 | |$23 million |10,000 |2014 |NA |Springs, South Africa |

| |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. | | | | | |

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

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

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

D. Web Sites Monitored

All Things Automotive

Auto Directory

Autofacts

Auto Home Page

Automotive Industries

Automotivedigest



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

Saab

Society of Automotive Engineers

Strategis

Toyota

Volkswagen

Volvo

Ward's Communications

-----------------------

INDEX

OFFICE OF AUTOMOTIVE & VEHICLE RESEARCH

A. J. Faria, Co-Director

Office of Automotive and

Vehicle Research

Odette School of Business

519-253-3000, ext 3101

AD9@uwindsor.ca

Pete Mateja, Co-Director

Office of Automotive and

Vehicle Research

Odette School of Business

519-253-3000, ext 4943

pmateja@uwindsor.ca

INTRODUCTION

WORLDWIDE AUTOMOBILE ASSEMBLER INVESTMENTS ANNOUNCEMENTS

SUMMARY

INFORMATION SOURCES

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