Hondas new City-building plant pictured under construction in Argentina

Honda's new City-building plant pictured under construction in Argentina

A number of new investments in Mercosur region production have been announced recently by Honda, Mitsubishi, Suzuki and Chery importers, mostly in Brazil.

Honda has started producing the City in Campana, about 47 miles from Buenos Aires, in Argentina. The investment was first announced in 2007 but, due to the 2008 world financial crisis, plans were postponed for two years. Capacity will be 30,000 units yearly but there is no announced deadline by which this volume will be reached.

The plant was all but imposed on the automaker by the Argentine government because Honda was a key automaker selling, but not producing, in Argentina. The two main Mercosur markets - Brazil and Argentina - are closely intertwined on an industry-wide manufacturing level (eg some automakers' engines made in one country are installed in cars assembled in the other).

The Brazilian Honda subsidiary did not respond to just-auto questions about how the two Honda plants in the neighbouring markets will work together nor if the City will now be produced only in Argentina. In 2010, Honda sold 5,320 Citys in Argentina (exported from the Brazilian plant) and 35,124 in Brazil itself.

Mitsubishi importer/assembler Group Souza Ramos (GSR) has operated a manufacturing plant in Catalão, state of Goiás in Brazil’s central plains (200 miles/120km from the federal capital Brasília), since 1998 and, late in April, confirmed a new US$630m investment. Plans are to double assembly capacity to 100,000 units a year, and add an engine plant, its first.

On top of the L200 and Triton pickup trucks and Pajero TR4 and Sport SUVs, the plant will start production of the Lancer sedan and the Pajero Dakar currently imported from Thailand.

After producing over 160,000 Mitsubishis in Brazil, GSR joined up with investment bank BTG Pactual early in 2010. The group is also the official Suzuki importer (since 2008; currently selling the Jimny, Grand Vitara and SX4) and the new joint venture will now also produce Suzuki vehicles locally.

The initial spend of $60m will be for a plant to produce the compact Jimny SUV at the rate of 7,000 units a year. This will be a separate operation from the Mitsubishi factory though the new plant will also be in Goiás, thanks to the state's generous tax breaks. The chosen city? Itumbiara, 200 miles (320km) from the federal capital Brasília.

Luis Rosenfeld, president of Suzuki of Brazil, announced “a sustainable growth plan for the brand for the next 20 years”. The Japanese firm has 15 manufacturing plants worldwide - notably including the Maruti operation in key fellow BRIC country India - and produced 2.8m units in 2010.

Meanwhile, China's Chery used the Brazilian launch of the QQ subcompact – half-heartedly received by the media despite becoming the most affordable model sold here – to detail plans of their local assembly plant.

A cornerstone-laying ceremony in Jacareí, 50 miles east of São Paulo City, is scheduled for this month as part of a planned investment of over $400m in Brazil. Vehicles produced locally will be on a compact platform plus a mid-size one underpinning five models.

The Fullwin compact will be offered in both hatchback and sedan versions while the S18 will come in hatch, sedan and minivan forms; the sedan, a popular bodystyle in South America, is not, by the way, produced in China. The Face hatch, although currently sold here, will not be manufactured locally.