Daimler AG's Dieter Zetsche, left, and Renault-Nissan's Carlos Ghosn shake hands after announcing plans to build luxury cars in a plant in Mexico.

Auto production in Mexico is poised to grow by 8.4% in 2017 as new and upgraded manufacturing plants increase the number vehicles they build for export, according to a new report from BMI, the research arm of Fitch Group, which specializes in the analysis and evaluation of financial information.

“For 2017, we maintain a bullish outlook on the Mexican autos industry, particularly light vehicle manufacturing, despite our forecasts of a decline in total light vehicle demand in the US and Canada,” the report noted.

The report predicts fan 8.4% rise in Mexican light vehicle production, including a 7.4% increase in passenger car output and a 9.8% rise in light commercial vehicle production, which includes sport-utility vehicle output.

Vehicles built in Mexico are also exported to Europe and to other countries throughout Central and South America. Key markets in South America, notably Brazil, are beginning to show signs of recovery, the report noted.

Meanwhile, the production in Mexico will be spurred by a number of large light vehicle assembly investments coming online in late 2016 and throughout 2017, which will outweigh the negative effects of a 4% drop in passenger car sales in the U.S. and Canada, which are Mexico’s two most important export destinations.

“We highlight three key manufacturing plant inaugurations that will spur output upwards in 2017: The joint venture between Mercedes-Benz and Nissan’s premium brand, Infiniti; Audi’s new SUV production plant; and Kia Motor’s recently inaugurated plant.

Honda CEO Takanobu Ito, (center right) during groundbreaking ceremonies for the maker's plant in Mexico.

“With both the Mercedes-Infiniti JV and Kia’s plant set to have a capacity of 300,000 units and Audi’s plant to add a further 150,000 units worth of annual capacity, we believe total light vehicle production in the country will gain a significant boost from ramp-ups at these plants.

(New Trump lashes out at Ford for Mexico plans. Click Here for the story.)

“Though we do not expect these plants to reach full capacity levels of output in 2017, even if these plants produce at just half of their capacity they still promise to add up to 10.8% to total national production of light vehicles.”

BMI also noted that other key manufacturing investment projects at existing plants will also add upward momentum to sales. In particular, SUV production will gain a boost from the introduction of new SUV models at Fiat Chrysler Automobiles’ Toluca plant, Volkswagen’s Puebla plant and Nissan’s Aguascalientes plant. FCA plans to use the Toluca plant for production of a new Jeep crossover vehicle

On the passenger car production side Nissan’s introduction of the new Sentra, and VW’s plan to build the VW Tiguan will represent bigger numbers out of the country.  Nissan is adding production of the Sentra at Aguascalientes and spending on another $150 million to expand the plant for production of the Introducing production of a new crossover model, the Nissan Kicks.

(Ford takes the hit, but GM, other automakers expand in Mexico. Click Here for the story.)

Suppliers are also building new plants in Mexico in support of the automakers’ facilities there.

Brembo, the Italian maker of brakes, recently opened a new plant outside of Monterrey in northern Mexico and has announced plans for construction of a modern foundry next door to the new factory.

The new plant will employ more than 500 when fully operational, could add $100 million in annual sales to Brembo’s top line. The new plant will concentrate on production of aluminum calipers for a variety of vehicles built in Mexico by American and European carmakers.

(Trump, Ford Motor Co. tussle over Mexico. For more, Click Here.)

Brembo is also negotiating to bring work from Asian carmakers into the plant as well, according to Jose Miguel Leon Graffin, plant manager.