ZKW Group Boosts its Automotive Production in Silao, Guanajuato, with a 51 Million Dollar Investment until 2025

The ZKW Group continues to expand its production capacity in Silao, Guanajuato. Recently, the Austrian company specializing in metal components for the automotive industry launched the third expansion of its factory in the Santa Fe IV Industrial Park in the Puerto Interior neighborhood. Additionally, they announced an additional investment of over $51 million for a new facility of approximately 7,000 square meters, which will be operational starting in 2025 and will be focused on manufacturing high-quality headlights.

In 2016, ZKW Group's first plant in Silao began operations. That year, SiiLA reported that the company had two industrial properties totaling nearly 22,000 square meters of gross leasable area (GLA). From 2020 onwards, ZKW Group added over 19,500 square meters to its operational portfolio in Silao, effectively doubling its GLA in the national territory.

With these recent expansions, the Austrian manufacturer will have around 48,700 square meters of production space, where they manufacture high-quality headlights for automotive companies such as BMW, Daimler, Ford Lincoln, General Motors, Navistar, Nissan, Volkswagen, and Volvo.

By 2025, ZKW Group plans to produce approximately 3.5 million headlights annually and have 2,522 employees in Mexico.

Silao, a Strategic Hub for the Automotive Sector

According to ZKW Group, Silao plays a strategic role in their production network due to the "attractive framework conditions" for the automotive industry. These conditions include proximity to significant vehicle production and distribution centers in the Mexican Bajio, with a connection to the United States border, reducing logistical costs. Additionally, Silao boasts a robust logistical infrastructure, a skilled workforce, and competitive costs compared to other regions.

As of the third quarter of 2023, the vehicle and parts sector represented 66% of the industrial GLA in Silao. Over the past two years, this industry has experienced 6% growth, currently occupying around 2.2 million square meters in the region.

Silao is characterized by a low vacancy rate with historic lows of 3.4%, in a context where gross absorption remains at levels higher than those observed in 2021 but with less dynamism than in the previous year. The slowdown in absorption in 2023 and the deceleration in the delivery of new inventory have contributed to Silao's reduced availability rate, at least over the past year.

Thanks to its infrastructure and strategic location, this region of Guanajuato continues to be a key hub not only for the automotive sector in Mexico but also for several industries looking to establish and expand operations in one of the most attractive regions for nearshoring-related investments (the Bajio).

According to SiiLA, in the past year, the manufacturing and food sectors were the fastest-growing in Silao, with 35% and 28% increases, respectively.

For more information on this and other real estate submarkets in Mexico, explore SiiLA REsource or contact us at contacto@siila.com.mx.