Mexico beat the UK and Canada and became the fourth largest automotive exporter by value. In 2018, Mexico’s automotive exports were worth US$49.4 billion, which meant a 19 percent increase compared to 2017. While the industry celebrated this milestone, the domestic vehicle market saw a challenging week after President López Obrador’s requested the analysis of schemes to import used vehicles from the US. “Many people who would otherwise be unable to access a vehicle purchase these units due to their low prices,” he pointed out. AMIA, AMDA, INA and ANPACT responded to the president with a letter highlighting that the Mexican automotive industry would take a major hit if used-vehicle imports are once again permitted freely on Mexican roads. These organizations underlined that sales of new vehicles in Mexico could drop 30 percent overnight, causing the loss of jobs and investments.
The dawn of a new trade era approaches as USMCA reaches the US Congress for ratification. Donald Trump’s administration pushes for a swift approval but the process could take up to three months. In Mexico, Jesús Seade, Undersecretary for North America of the Ministry of Foreign Affairs, said this agreement will strengthen the competitiveness of the whole region. In other trade news, Mexico’s return to vehicle free trade with Brazil means good news for several OEMs based in Mexico. Companies such as Kia, Nissan, GM, FCA Group and Volkswagen could take the most advantage as they dominate the Brazilian vehicle market.
The road is clear, this is the week in automotive!
Mexico’s Automotive Drive
Mexico has reached the fourth position among the biggest automotive exporters with an exports value of US$50 billion in 2018.
Bosch plans to boost its production in Queretaro by adding a new production line in 2019 and another two in 2020.
Moldex, a subsidiary of Grupo Bimbo, is in talks to produce electric delivery trucks for three companies. As of March, the company’s delivery backlog stands at 110 units.
Martín Orozco, governor of Aguascalientes, says there is a chance that state governments of the Bajio region drop their plans regarding a regional trade promotion agency.
Troubled Waters for the Vehicle Market
AMIA, INA, AMDA and ANPACT requested President López Obrador to not allow the regularization of used-vehicles imports from the US given the impact that such a measure would have on the Mexican automotive industry.
Premium-vehicle sales had a rough start with a drop of 31.5 percent in the first two months of 2019 and the lowest sales volume since 2011.
Seven out of every 10 vehicles sold in Mexico are imported. According to AMDA, Mexico produces more high-end vehicles but consumes more basic models.
New Trade Opportunities
Free automotive trade with Brazil is good news for all OEMs based in Mexico, especially GM, Volkswagen, Nissan, FCA Group and Kia that dominate the Brazilian market.
USMCA will strengthen the competitiveness of the Mexican economy, according to Jesús Seade, Undersecretary for North America of the Ministry of Foreign Affairs.
USMCA will reach the US Congress in April. Though the Trump government pushes for a quick ratification, this process could take up to 90 days.
Cummins ponders shifting part of its component procurement from Brazil, China and India to Mexico in order to meet USMCA standards.
GM will invest US$1.8 billion and create 700 new jobs in the US after months of criticism from US President Trump.