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Renewed momentum in Mexico's automotive industry

Renewed momentum in Mexico's automotive industry

Posted by Alejandra Romo on September 02, 2013

Mexico continues to climb among the top car and auto parts producing countries. Car assemblers and auto parts manufacturers hit production and sales records in 2012 and are getting ready to step on the gas with the new federal government.

By Jesús Estada Cortés / ProMéxico

The automotive industry in Mexico is climbing into the top spots worldwide in terms of production and exports, while it glides through a mix of company-agreed actions and public policies to support the sector. The arrival of more investments and joint working plans with the new federal government has resulted in the determination to advance firmly towards consolidation.

Last year –2012– was a historic time for the automotive industry in Mexico. The country became the fourth largest new light vehicle exporter and eighth largest automaker globally when it hit records in terms of production at 2,885,000 units and exports of 2,355,000 units.

Furthermore, "the sector closed 2012 strongly in terms of investments; the country is an important destination for new investments," says Eduardo Solís, president of the Mexican Association of the Automotive Industry (AMIA). Between 2007 and 2012, assemblers –mainly large firms such as Nissan, General Motors, Volkswagen, Ford, Honda, Fiat, Mazda and Daimler Trucks– injected 10.78 billion usd into production capital to establish new plants or expand facilities that were already operating.

"Mexico has benefited from the three elements it offers assemblers worldwide. First, a world class manufacturing and export platform with a network of trade agreements that provide preferential access to markets in over 40 countries," explains Solís.

The other two features that Mexico offers international assemblers are "extremely experienced human capital; we have world class engineers and technicians," he continues, and a base of highly skilled suppliers that make Mexico the leading auto parts supplier to the US market.

Besides those three advantages, Solís adds "the country's business environment, with a stable economy, low inflation and a stable exchange rate. This is the ideal framework to bring investments to Mexico and a snapshot of the promising future that awaits our sector."

With this perspective, Solís explains that industry forecasts for 2013 point towards more than 3,150,000 units produced and over 2,550,000 vehicles exported. In addition, "the investments that have already arrived will enable Mexico to produce more than 4 million vehicles by 2017."

In spite of the momentum experienced by production and exports, Mexico's automotive industry faces important challenges. According to Solís, one is strengthening the domestic market. Less than 1 million units are sold per year in Mexico and "there is a clear business opportunity for the industry to reactivate its domestic market, which according to studies can reach 1.5 to 1.8 million vehicles sold per year," he says.

To reach the sector's domestic and international goals, the AMIA is already at work with Mexico's new authorities. "Since the start of the new government we have collaborated closely with President Enrique Peña Nieto's administration; we have signed an agreement with Argentina, which was essential, and we did it during the first 15 days of the new regime. We also agreed on a very important standard, the NOM (Official Mexican Standard) 153 on greenhouse gas emissions, which remained uncertain with the previous administration," says Solís.

 

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