This has been a tough week for Mexico. President Andrés Manuel López Obrador’s (AMLO) decision to fight fuel theft by closing fuel ducts has impacted the general population although the impact has been somewhat contained. However, if the administration fails to find a better way to tackle this issue, manufacturing operations will start to feel the impact.
Much more happened over the week but before moving forth, check out our latest analysis on the most recent decisions the government has made regarding the automotive industry and the support offered to foreign investors.
Ready to hear more about last week’s news? Buckle up!
Issues with Takata airbag inflators are still not over. Toyota announced a new recall of 1.7 million vehicles worldwide as part of the campaign that started in 2016. Meanwhile, FCA is recalling 1.4 million vehicles in the US, 88,830 in Canada and 12,821 in Mexico thus entering the final stage of a campaign that has already replaced 4 million airbags.
After Mary Barra, CEO of GM, announced the halt in production of four plants in the US, Tesla’s Elon Musk showed interest in purchasing these facilities. Musk, however, is not interested in inheriting GM’s workforce due to a feud with the United Automobile Workers (UAW) union.
The UAW, however, has other fish to fry at the moment. Production of the new Chevrolet Blazer is still a-go in Mexico and GM has already issued layoffs at its four nonproductive plants in the US. The UAW therefore circulated a letter among its members, urging them not to purchase the Blazer unless it is fabricated in the US by UAW members.
What 2018 Left Behind
Despite adjustments in production platforms and the halt in operations at the Honda plant in Celaya, light-vehicle production remained fairly stable in 2018 dropping only 0.6 percent to a total of 3.91 million units compared to 2017, according to INEGI and AMIA. Exports, on the other hand, rose 6 percent against the numbers from 2017 to 3.45 million vehicles with 74.4 percent of them going to the US.
Despite the free fall in overall light-vehicle sales, hybrid and electric units are still gaining ground and growing at double digit rates. Between January and October 2018, 13,925 of these vehicles were sold representing a 68 percent increase compared to 2017.
Eduardo Solís, Executive President of AMIA, said that despite being supportive of the government’s decision to fight fuel theft, the new administration must find a way to avoid a crisis as soon as possible. The manufacturing chain is already facing issues due to the just-in-time nature of its business and distributors are having trouble delivering vehicles to clients because there is no fuel to fill the tanks.
According to Alfredo Arzola, Director of the Guanajuato Automotive Cluster, if the situation is not contained, plants could start shutting down operations by next week. “Investments are at risk,” he said.