Japanese Automakers March into Mexico, Set up Export Base

Mexico is on pace to become the world's No. 1 auto exporting country to the United States as early as next year, thanks largely to the addition of 605,000 units of capacity by Japanese automakers.

The explosive Japanese buildup poses a triple threat to the Detroit 3 by:

1. Making Japan's manufacturers all the more potent in challenging American and other brands in the United States.

2. Helping the Japanese carve out a larger share of the fast-growing Mexican market, traditionally a preserve of Detroit.

3. Giving the Japanese a launchpad for exports to Latin America and Europe, where Japanese brands are small but growing.

Japanese brands are poised for a new assault from south of the border. In many ways, the Japanese are playing catch-up. Ford, Chrysler and General Motors long ago discovered the pluses of Mexico and have manufactured there since the 1960s. Nissan Motor Co. was a fast follower, opening its first plant in 1966. It now has three factories, including a new one in Aguascalientes.. That plant, its second in that city, opened in November with capacity for 175,000 Sentras. Today, Nissan is Mexico's top-selling brand. Honda Motor Co. arrived in 1995 with relatively small capacity of 63,000 units at its first plant. Mazda's plant will churn out 230,000 units when it reaches full capacity in the fiscal year ending March 31, 2016. More Japanese may follow. Toyota will source 50,000 small cars from Mazda's new plant in 2015, a move some see as testing the waters for its own future plant. Infiniti may build cars in Mexico, too. With all this new Japanese capacity, Mexico will eclipse Canada and Japan as the No. 1 exporter to the United States next year.

Since 2002, the flood of Japan-brand exports from Mexico has more than tripled, hitting 551,092 units in 2013. A decade ago, they accounted for 12 percent of shipments out of Mexico. By last year, their share had surged to 23 percent. The Japanese are not targeting just the United States. Mexico is also a staging point to grab sales from rivals in Mexico, Latin America and even Europe.

Japanese brands have gobbled market share, largely at the expense of the Detroit 3. In 2009, they had only 23 percent of the Mexico market, compared with the Detroit 3's 57 percent. By 2013, the Japanese brands had turned the tables. Their collective share shot up to 42 percent, while the Detroit 3's shrank to 35 percent.