This is an exclusive preview of the 2017 edition of Mexico Automotive Review. If you want to get other relevant insights regarding the Mexican automotive industry, get your copy of Mexico Automotive Review 2017 after September 25th.

Article based on an interview with Óscar Albin, Executive President of INA.

Q: What is Mexico’s current position in auto parts production and what are the country’s goals for 2017?

A: Auto parts production remained stable in 2016, increasing approximately 1.5 percent compared to 2015. This was mainly due to stronger light vehicle production in the US, which fueled our exports there and to Canada. The final results of 2016 showed production of close to US$83 billion of auto parts and our forecast for 2017 is to grow between 2 and 3 percent. Mexico is the sixthbiggest auto parts manufacturer globally, only behind China, the US, Japan, Germany and South Korea. Provided vehicle production remains on schedule and the US market keeps growing, we will be close to US$100 billion in auto parts production by 2020. This would catapult us to fourth place in the international ranking, neck and neck with Germany.

Q: How many Mexican companies participate in auto parts manufacturing operations?

A: Approximately 25 percent of total auto parts production comes from Mexican companies, mainly Tier 2 and Tier 3 suppliers. There is a limited number of Mexican Tier 1 providers acting as true multinationals with significant production or sales operations abroad, but this happens in other countries as well. Design and engineering for vehicles and auto parts is concentrated in the US, Germany, Japan, South Korea and France, so most leading suppliers come from these nations. Mexico, among several other countries, is gradually seeing more leading national suppliers and several local companies have set international standards in the automotive industry.

Q: What led to China becoming such an important presence in the international aftermarket industry?

A: All countries buy vehicles but only 12 are responsible for the world’s automotive production: China, the US, Japan, Germany, South Korea, India, Mexico, Spain, Canada, Brazil, France and Thailand. These are the most important markets for original equipment components. Auto part manufacturing has developed around those countries and few have ventured to export to other regions.

Normally, the only components that travel overseas are those destined to the aftermarket and to be successful in this kind of venture, companies must invest heavily in marketing and localization strategies. In 2007, China decided to become the aftermarket supplier for the entire world, forcing other countries like Mexico’s manufacturers to compete with Chinese imports. Almost 40 percent of the components used in the Mexican aftermarket are imported, mostly from China. The market has become extremely price-competitive and the only way for Mexican companies to compete is to abide by strict quality policies that override the low prices China can offer.

Don’t forget to follow us on twitter at @mexautomotive and @mexautomotriz for the latest industry news.

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