July was tough on the Mexican automotive industry. Not only did the Mexican economy grow a meager 0.1 percent in 1H19, but it was the worst July sales-wise for the domestic new vehicle market since 2014. The economic slowdown took a hit on the country’s manufacturing engine: the Bajio region. The economy of Aguascalientes and Guanajuato shrank 1.2 percent and 1 percent, respectively. Perspectives are also grim for the country’s vehicle production. Guido Vildozo, Managing Partner for Light Vehicles at IHS Market forecasts that only 3.8 million units will be assembled in the country and production will not grow until 2026.
Despite these challenging conditions, the silver lining is to be found in the exports markets. Mexico’s automotive exports showed the greatest dynamism of the Top 10 automotive producers, according to WTO. Additionally, Mexico increased its trade openness in 2018. Additionally, the local sales of heavy vehicles experienced an atypical increase as a consequence of the NOM-044 emissions standard entering force on July 1. In terms of FDI, more companies have set up shop in San Luis Potosi. The state attracted new operations or expansions of several Japanese companies including Hirotec.
There are also new projects on the horizon. Logistics company Solistica and industrial group Grupo Quimmco are working to develop a new electric vehicle. Volvo and Marcopolo will build 100 new buses to operate in Mexico City’s Passenger Transportation Network, Grupo Traxión projects to close 2019 with investments worth US$1.8 billion in Mexico and BMW will add a hybrid version of at least half of all vehicles in its lineup.
The road is clear. Check out what’s new in the automotive industry!
Troubled Skies for Automotive
Last month was the worst July since 2014 for the Mexican automotive industry. With 105,699 vehicles sold in that month, it was the lowest sales July in the last five years.
Ride-sharing apps have become a refuge for unemployed and underemployed Mexican workers. With rising unemployment rates, people have turn to self-employment for income.
Mexico’s vehicle production will not increase until 2026, according to IHS Markit. The company projects that vehicle production will drop to 3.8 million units in 2020.
A Silver Lining
Mexico increased its trade openness in 2018. The sum of the country’s exports and imports accounted for 75.8 percent of the country’s GDP.
Valeo Lighting Systems has strengthens its presence in Queretaro. Two decades after arriving to the state, the company continues to develop products locally.
Toyota will require between 70 and 150 engineers for the first stage of its new assembly plant in Apaseo el Grande. The company plans to assemble 100,000 Tacoma units in this stage.
New Projects Ahead
BMW will offer a hybrid version of half of the vehicles in its portfolio toward 2020 as part of its strategy to boost sales of green vehicles in Mexico.
Volvo Group was awarded a tender to supply 100 buses for Mexico City’s Passenger Transportation Network (RTP). These units will be powered by Euro VI diesel engines.