Production Capacity in Mexico Likely to Grow 47% by 2023

Vehicle production capacity in North America will expand by 3 million units from 2015 to 2023, with nearly half the growth occurring in Mexico, says LMC Automotive Ltd.

The analysis anticipates 12% capacity growth in the U.S. and 4% shrinkage in Canada over the period. LMC says carmakers aren’t likely to significantly change those plans in the next few years in spite of threatened sanctions by the incoming Trump administration.

The U.S. currently accounts for 67% of all vehicle production in North America. LMC calculates that Mexico’s 20% share will grow to 25% by 2023, as capacity climbs from 3.7 million to 5.5 million units under previously announced investment plans.

LMC says the auto industry’s current installed capacity in the U.S. won't be able to absorb more than about 500,000 units of volume from Mexico or elsewhere. A bigger shift would require new plant investments and the likelihood of either closing new factories in Mexico or operating them well below capacity.

Either of those expansion options would add cost, reduce profits and negatively impact the North American supply base, LMC cautions. It says planning will be hobbled by uncertainty and the threat of negative publicity until the Trump administration clarifies its trade policy.