Forgive the cliché: The auto industry in Mexico is hitting on all cylinders.
Nissan has emerged as a major player in Mexico. In recent years, Nissan Mexicana has invested more than US$2 billion in the country.
Jorge Vallejo, Nissan’s director of Foreign & Government Affairs for Mexico, Latin America and Caribbean, reported the supply chain needs to understand the magnitude and opportunities that this huge investment offers over the long term. Vallejo made it perfectly clear that the supply chain must move in step with the OEM.
He is also in charge of the Zero Emission Business Unit responsible to launch the 100 percent electric car Nissan LEAF.
These are very dynamic times for Nissan Mexico. How well is that market share holding up? How are things in Aguascalientes?
The trend is still to move up, the needle is moving up. We have more than 25 percent of Mexico’s market share with a very interesting gap with the second place. The needle trends to keep up. The TIV, the Total Industry Volume in Mexico is not as good as we expected and still there is a lot of opportunity to increase the TIV. We are the leaders and we need to be the leader on a very important piece of volume.
The steps that need to be taken to increase the TIV or domestic sales in Mexico are on a different level: More financing from government, more financing from the entities. We have our own finance entity that is supporting us or helping us to increase the TIV and the market shares. We need to start working on how to reduce the import of used vehicles from the U.S. into Mexico, which is really blocking or affecting more sales and more commercial operations.
One of the big developments for Nissan over the past couple of years centers on Aguascalientes with the $2 billion investment there. How is the start up going?
It’s great, great. The ramp up was better than expected. We thought it was going to be slower. We have identified that it is really becoming one of the key functions and key plants for the region. We already have more than 35,000 vehicles manufactured in this plant.
We are mainly manufacturing Sentras which are being exported to the U.S. and Latin America. The U.S. is one of the most important markets and we really want to keep on that pace. With 35,000 vehicles manufactured since November and we are in March, you can see the Aguascalientes plant is amazing and has become a global benchmark in the entire Nissan world.
What is happening with Nissan technology as well as the benchmarks?
We are identified to be making one of the highest quality vehicles, to manufacture one of the most quality vehicles in the entire market. We have very competitive vehicles as well that are exported and of course very well taken into each one of the markets that we sell to. What we need to do to maintain that pace, maintain that volume, to maintain those exports and commercial operations.
We need to develop new technology that at the end will maintain us as the leaders in the auto industry, not just by selling enough quality vehicles but very competitive vehicles.
The technology needs to be following, implementing, innovative needs. We can keep on selling those high quality cars. The mindset of the commercial guys, the mindset of the market is changing. The market now wants higher quality vehicles, of course more innovative vehicles, more technology implemented in each one of the vehicles that they buy. We need to be following that pace, we need to be leading it.
How do you take Nissan suppliers along with you so they can keep up with you?
That’s the million-dollar question. First of all we need to let them know exactly where we are headed. Let them know that you don’t need to be doing exactly what you are doing in following me. You need to be along with me. How? Developing more supply chain, developing more local producers, investing in them. Make sure that they have enough financial capacity to follow me or providing me good supplies so I can sell the vehicles. For them to be working along with us in the innovation and the technology that is implemented, otherwise when it is set on the market they are going to be so far behind that they are not going to be able to lead us or to follow us.
How critical will it be that your supply chain in Mexico be as close as possible to Aguascalientes?
We keep the supply as close as possible to us. We need immediate response, immediate base to follow us in the lead. The closer you are as a supply provider, as a provider to us, the closer it is going to be to developing new technology, the closer or the faster that we are going to be launching and achieving the market share that we need.
One thing we see as we take a look at a map of Mexico is the geographic center of the country is not far from Aguascalientes. How important is that location for you to achieve speed to market?
Definitely it is key, especially whenever you have a good connection to either the manufacture or to export or to transport of vehicles, it is key. You cannot go and implement in some locations in which you are going to be so far away that there is really nothing that can keep on connecting you.
We really need to have that in mind, hopefully we have obtained good response from the government that has allowed us to create more highways, more railroad, more connectivity so we can take what we have produce it, manufacture it, in a good quality and then export it.
To what extent do your key messages to the government focus on improving the domestic market?
My key message is we need to support all the investments that we have made. How do we support it? We do so by selling more, by increasing the TIV of market. We need to increase the TIV. There are huge opportunities to increase the TIV. Each one of the investments has been made not only to support what we are selling now but what we can sell in the future. If we can sell more in the future then our investment will pay off.