The first quarter of 2018 has been tough on Mexico’s automotive industry. An unexpected 10.9 percent drop in sales in March and another quarter with low automotive sales have exacerbated the industry’s headaches. A low automotive industrial performance could have dire consequences as the country’s economy has become more heavily dependent on its automotive industry than on oil and gas. On the bright side, Volvo Cars México forecasts an industrial rebound once the federal elections are over and the green car segment has experience a 64.1 percent growth.
After the National Guard was sent to the US-Mexico border to support the Department of Homeland Security, Mexico’s Ministry of Foreign Affairs warned the US government that the militarization of the border would harm bilateral relations. Mexico’s private industry called for NAFTA negotiations not to take place under aggressive conditions and refused to support an agreement that includes a sunset clause. An agreement could be reached in the beginning of May.
Why have Chinese automakers faced trouble selling their vehicles in Mexico? Find out in MAR’s “China’s Momentum in Mexico’s Industry.”
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Reduced Production and Low Sales
Mexican automotive production fell 10.9 percent in March compared to the same month in 2017, but exports grew 7.5 percent. This drop was related with the Easter holidays and reduced production in Ford and Volkswagen plants.
Vehicle sales in Mexico show no sign of recovery after a 10.8 percent drop in 1Q18. However, green vehicles sales grew 64.1 percent in January. The five top-selling vehicles in Mexico during 1Q18 were Nissan Versa and March, Chevrolet Aveo, Volkswagen Vento and Jetta.
Six million pre-owned cars are commercialized every year in Mexico, making the country one of the largest markets for those units.
Volvo Cars Mexico expects the country’s automotive industry to bounce back up after the federal elections.
Border Militarization Walls in NAFTA Negotiations
There is an 80 percent chance that the US, Canada and Mexico will reach an agreement on NAFTA 2.0 in the first week of May.
New E-Mobility Players and Services