It has been a hard week for the Mexican automotive industry. Railroad blockades, maquila strikes and fuel shortages are projected to impact vehicle production and exports, according to AMIA. The Bajio region could take the worst hit as raw materials and finished parts and vehicles remain stranded and unable to reach ports and factories. AMDA and KPMG also have grim projections for the industry in 2019. AMDA expects sales to keep contracting in 2019 although recovery is forecasted for 2020. Meanwhile, KPMG projects automotive companies in Mexico will face uncertainty due to reduced demand for new cars in the US. On a more positive note, there could be new opportunities for Mexico thanks to global agreements. Rules of origin between Mexico and Brazil have been strengthened and CPTPP opens the door for companies in Mexico to target new markets.
In international news, Nissan sold the most passenger cars worldwide in 2018 totaling 10.76 million units but the Volkswagen Group was the top-selling automaker with 10.83 million units vehicles including the MAN and Scania brands. In Canada, union Unifor called for a boycott on GM cars in Mexico and the US. Meanwhile, Google will build its first assembly plant to mass-produce self-driving vehicles in Detroit.
Rev your engine. This is the week in automotive!
Mexico’s Automotive Momentum
Mexico and Brazil raised to 40 percent the regional content needed for vehicles to be eligible for tariff advantages between both countries.
Mexican auto parts suppliers could increase their exports to Chile, Malaysia and Australia as a result of CPTPP.
Mexico reduced its dependency on auto-part imports from the US from 71.4 percent in 2015 to 59.8 percent in 2018.
The Bajio region could take the worst hit from railroad blockades organized by CNTE in Michoacan. AMIA warned these blockades, plus fuel shortages and strikes in several maquilas in Tamaulipas will take a toll on Mexico’s vehicle production and exports in January.
Automotive companies in Mexico will face uncertainty in 2019 as a result of slowing vehicle demand in the US, according to KPMG.
Sales of Dina’s trucks and buses increased to over 1,000 units in 2018. The Mexican OEM plans to reach 1,384 units in 2019.
According to AMDA, the ongoing sales downturn will stretch throughout 2019 with a projected 4.5-percent drop in vehicles sales in 2019. The association highlighted that sales could bounce back in 2020.
Troublesome Week for GM
Canadian union Unifor called for a boycott on Mexico-made GM vehicles in Canada and the US. GM warned that this boycott could harm the Canadian economy, as 66 component manufacturers in Ontario support GM’s operations in Mexico.