Nissan Fires Up New Mexican Plant

$2 billion project could soon have a partner in Mercedes.

by on Nov.12, 2013

Nissan flipped the switch on at its Aguascalientes Plant in Mexico. The Sentra is one of many products it will export from the facility.

Nissan has officially switched on its sprawling new assembly plant in the Mexican industrial center of Aguascalientes, a facility that will become a major part of the maker’s planned growth both in Mexico and the rest of the booming Americas.

The new plant is the result of a $2 billion investment by Nissan that it calls the most advanced assembly operation it now operates anywhere in the world. But the project is actually just partially complete. Even as the first saleable car rolls off the line at Aguascaliente today, Nissan appears to have big plans for the future. And that could include the addition of a partner at the complex.

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Though a reported announcement failed to materialize during the recent Frankfurt Motor Show, insiders confirm that Nissan is working up final details that would have its alliance partner Mercedes-Benz assemble some of its own luxury vehicles on the Aguascaliente campus – a move that would require a significant expansion of the still-new factory.

Nissan's Aguascalientes plant could be the site of a future link up with Mercedes-Benz.

“Nissan Mexicana is a global benchmark in manufacturing, productivity, competitiveness and customer satisfaction,” proclaimed Nissan CEO Carlos Ghosn, who attended the opening of the new plant. “The investment in our third vehicle plant in Mexico leverages the world-class manufacturing capabilities of the Nissan Mexicana team and is aimed at satisfying the high demand for Nissan vehicles produced in Mexico throughout the Americas and beyond. It will help consolidate our leadership in the domestic market and strengthen our growth plans globally.”

Mexico has long been a significant lynchpin in Nissan’s global strategy. Its Cuernevaca plant was the maker’s first factory outside Japan. And an earlier assembly line has been operating in Aguascaliente for the last 30 years.

That has helped Nissan gain a strong lead in the Mexican market where it has been the best-selling brand for 53 consecutive months, ousting long-time leader General Motors. Nissan currently has a 24.7% market share in the market, compared with 18.9% for GM and 13.9% for third-place Volkswagen. All three makers have significant manufacturing presences in Mexico.

In all, Nissan sold 244,967 vehicles in Mexico last year and hopes to significantly improve that number in the years ahead. But the reality is that the market has been all but stagnant, even as its neighbor to the north, the United States, recovers rapidly from the worst downturn in decades.

After hitting a peak of 1.15 million in 2005, the Mexican market tumbled to just 756,555 in 2009, according to industry figures. It is not expected to top the old record until 2015, according to Nissan forecasts.

As a result, a large portion of the 175,000 vehicles the Aguascaliente 2 plant will be capable of producing are expected to be exported. Indeed, about two-thirds of Nissan Mexico’s current output is exported. Key markets have included the U.S. and Brazil, but automotive demand has been booming in other countries in Latin America, and all told, Nissan Mexico products have so far been earmarked for 100 different world markets, thanks in part to the extensive array of free trade agreements Mexico has negotiated in recent years.

The new facility has launched just 19 months after work began on the site. Production is expected to reach full speed by next Spring. A total of 3,000 workers will ultimately man the line, each putting in 12 hours a day on a four-day week.

The facility features a number of innovations. For one, in many areas of the plant Nissan has foregone the usual moving assembly line. Instead, vehicles are mounted on automated guided vehicles, or AGVs, which carry them from one work station to another. That not only reduced the fixed investment in the facility, but also allows for greater flexibility. Rather than tearing up the line should changes be needed, engineers simply have to lay a new path on the cement floor using a special magnetic tape.

(Ghosn admits Nissan/Renault will not meet EV sales goals. For more, Click Here.)

“There is tremendous flexibility,” explained Oswaldo Noriega, the director of vehicle production engineering, adding that there is also “room for expansion” on the vast complex.

A mock-up of the facility shows open spaces reserved next to key sections of the new plant, notably by the body and paint shops. But, it appears Nissan has some specific uses in mind.

(Click Here to see the new and old versions of the Nissan Rogue.)

Ghosn and Daimler AG CEO Dieter Zetsche have confirmed they are discussing the possibility of producing some Mercedes-Benz luxury cars at Aguascaliente 2, a move that would require a major expansion in the next several years.

There had been expectations the tie-up would be announced at the Frankfurt Motor Show last September. There’s been no explanation for the delay – but sources at both companies told that the alliance is moving ahead and could be announced soon.

If that happens, Mercedes is expected to produce a version of its new CLA – or a new crossover vehicle sharing the small luxury car’s platform – in Aguascaliente. Meanwhile, Nissan’s Infiniti brand would build its own small luxury model in Mexico using the same platform.

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