Industry Trend Analysis - PSA Investment Raising LCV Assembly Outlook - MAY 2017
BMI View: PSA Groupe ' s contract with local producer Nordex has prompted us to revise up our Uruguay light commercial vehicle production growth forecasts in 2017 to and through to 2021. The firm ' s small intended scale of van production, however, highlights the lack of a developed van market in the Mercosur regio n that will hold back overall sales for PSA.
In March, PSA Groupe announced a contract manufacturing agreement it has made with the Uruguayan manufacturer Nordex and its local retail partner EASA. Nordex will assemble PSA Groupe's new Peugeot Expert and Citroen Jumpy vans in Uruguay from H2 2017, with planned output of 6,000 units annually . The majority of production at the plant will be slated for export to other Mercosur trade bloc markets, mainly Brazil and Argentina.
The announcement has prompted us to revise up our light commercial vehicle (LCV) production growth forecast for Uruguay to 23.6% in 2017 and to average 15.9% annually over the 2017-2021 forecast period ( see chart below). At this pace of growth Uruguay's LCV output will grow from its low estimated base of 5,585 units in 2016 to 11,332 units by 2021. The investment is a newfound show of confidence in Uruguay's manufacturing sector after the industry experienced a sharp loss with the exit of Chinese manufacturer Chery Automobile in 2015 ( see ' Vehicle Assembly On The Rocks After Major OEM Exit ' , May 20 2015).
|PSA Investment Loading Up LCV Production|
|Uruguay - LCV Output, Units & % chg y-o-y|
|e/f = BMI estimate/forecast. Source: Uruguay XXI/BMI|