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Japanese parts manufacturers are sharply increasing investment in Mexico, keeping pace with expansion there by Nissan Motor and other carmakers.

According to the Nikkei business daily, Kasai Kogyo plans to start production of interior parts at a 50-50 joint venture with Grupo Antolin Irausa SA in the state of Guanajuato as early as autumn 2013 with projected spend of JPY2-3bn. When completed, the plant will boost Kasai’s Mexican production capacity 50%.

Tachi-S has begun selecting sites in the state of Aguascalientes for a plant that will make automobile seats. It could spend as much as JPY10bn on the plant which will have lines for manufacturing seat frames and assembly lines for covering the frames. The facility will be placed into service in stages also beginning in autumn 2013.

Around the same time, Yorozu will open a suspension parts plant in Guanajuato. The plant, the company’s second in Mexico, will cost around JPY5bn.

Because labour costs are much lower in Mexico than in the US, several western and Japanese automakers are making it a key location from which to export vehicles to the US and South America. Mexico has free trade agreements with over 40 countries.

Kasai, Tachi-S and Yorozu all have a substantial business with Nissan. Nissan’s production capacity in Mexico is expected to reach around 1.3m units annually – exceeding that in Japan – when it brings a new car factory on line in the state of Aguascalientes as soon as the second half of 2013.

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By GlobalData