Promoting a business-friendly environment and boosting the arrival of FDI were among the policies that Presidents Vicente Fox, Felipe Calderón and Enrique Peña Nieto placed at the core of their agenda. The milestones that each government reached regarding the industry’s development varied according to the macroeconomic and political events they faced, but all three administrations placed great importance in competition and free trade.
For the Mexican automotive industry, government support has meant the arrival of new light-vehicle OEMs and the introduction of more production lines and assembly plants from investors already present in the country. The creation of sectoral programs for several economic sectors including automotive, the establishment of ProMéxico in 2013, the participation of federal and state governments in various trade missions and the creation of tax and non-tax incentives were among the key policies that attracted major players to the country.
Between 2001 and 2H18, 13 new light-vehicle assembly plants started operations in Mexico including Toyota, Mazda, Audi, the Renault-Nissan Alliance-Daimler, BMW, Kia and BAIC. Three Mexican OEMs started building vehicles as well: Mastretta, VUHL and Zacua. Although Mastretta stopped production in 2014, VUHL continues to build high-performance vehicles in Queretaro. Meanwhile, Zacua opened its assembly facility in Puebla in 2018. Prior to 2001, US OEMs GM, Chrysler and Ford, Japan’s Nissan and Germany’s Volkswagen reigned in the Mexican market both in terms of production and sales thanks to their local assembly processes, but the arrival of new players to the block completely changed the paradigm with US automakers taking hits in terms of market share.
During these three presidential terms, Mexico has also more than doubled its vehicle production. The country went from producing 1.82 million light vehicles in 2001 to over 3.93 million in 2017. Though production plunged deeply, with almost 600,000 fewer vehicles, in 2009 as a consequence of the international financial crisis, Mexico quickly regained its pre-crisis production levels and a strong automotive momentum in 2010. Between 2010 and 2017, Mexico’s vehicle production reached an average year-on-year growth rate of 7.5 percent. This growth was supported by the demand stemming from an increase in vehicle exports and a strengthening domestic automotive market.
Mexico’s vehicle exports also more than doubled between 2001 and 2017 with an increase of 216.8 percent. The country exported 1.43 million vehicles in 2000, a figure that grew to 3.25 million in 2017, which is a historic peak. In this period, the lowest point for Mexican vehicle exports was in 2009 when only 1.22 million light vehicles were sent abroad as a consequence of the financial crisis.
The Mexican automotive industry remains a heavily exports-oriented sector but the domestic light-vehicle market has experienced solid growth as well. Although sales plunged in 2009 to 754,918 vehicles sold compared to the 918,835 units sold in 2001, the figure increased to 1.53 million in 2017. It would take seven years for sales to recover beyond its previous all-time high of 1.139 million units in 2006 and it was only in 2015 that the market started to see real growth again with record-breaking sales of 1.351 million vehicles.
Several government policies supported the growth of the Mexican vehicle market. Stricter restrictions on used-vehicle imports from the US kept these cheap, low-quality cars at bay and boosted sales in the more inexpensive sub-compact and compact new-vehicle segments in Mexico. Between 2013 and 2017, used vehicle imports continued contracting. While in 2013 644,209 used cars were imported, by 2017 this figure dropped to 123,638 and is projected to continue falling. Yet, it seems that for now, the domestic market has peaked after reaching record sales of 1.6 million new vehicles in 2016, followed by a gradual deceleration that remains to this day.