This past week, most news in Mexico was related to the New International Airport and President-elect Andrés Manuel López Obrador’s popular referendum to decide its fate. USMCA continues to be a hot topic as well. The overall sentiment regarding the new trade pact might be positive but there are still doubts and concerns among state governments and investors regarding the actual conditions of the treaty’s automotive chapter.
Want to know more about last week’s events? Keep straight ahead! Also, don’t forget to read our blog about NR Finance’s recent change of heart on Uber and Cabify and the risks these platforms represent for financing companies.
Trade Bumps and Boosters
On request from Martín Orozco, Governor of Aguascalientes, Minister of Economy Ildefonso Guajardo will meet with 11 state governors and several representatives of the automotive industry to explain USMCA’s automotive chapter in detail.
Tire manufacturers will face many challenges to comply with USMCA’s new rules of origin, according to Alfonso Zendejas, President and Director General of Bridgestone Lationamérica Norte, mainly due to the lack of raw material supply in the region.
At the sixth congress of the National Chamber of the Iron and Steel Industry, Víctor Cairo, Director General of ArcelorMittal in Mexico, said companies expect free trade under USMCA regulations. However, if export quotas were to be implemented, the industry would be ready to accept them as long as they provided enough room for the industry to grow.
The CPTPP is finally a-go. On Friday, Canada became the sixth country to ratify the agreement after Mexico, Japan, Singapore, Australia and New Zealand. After this, it will take only 60 days for CPTPP to be implemented.
Overall Good News
Calsonic Kansei acquired FCA’s auto parts division Magneti Marelli for US$7.1 billion. “This combination with Calsonic Kansei has emerged as an ideal opportunity to accelerate Magneti Marelli’s future growth,” said Mike Manley, CEO of FCA. The acquisition would also be the ideal opportunity for FCA to pay dividends to its investors for the first time since the merger between Fiat and Chrysler in 2014.
For the first time in two years, Tesla reported a market-beating quarterly profit with net income of US$312 million thanks to increased production of the Model 3 with margins of almost 20 percent that drove cash flow of US$881 million.
The Renault-Nissan Alliance will take control of Mitsubishi in Mexico starting in February 2019. It will open 30 dealerships focused exclusively on Mitsubishi, which is marketed at the moment at FCA’s dealerships that also sell Chrysler, Dodge, Jeep and RAM.