Automotive

The Automotive Mexican Market and Industry

Mexico is the world’s tenth largest automotive producer, accounting for 2% of world production world and currently produces over 2 million vehicles annually and it is expeted that by 2011 it will rank fifth, competing with stronger economies such as India, United States, China and Slovakia.The automotive industry is a vital sector of the Mexican economy. In 2005, it generated $42 billion, second only to the food industry as a percentage of the GDP.

Mexico has also become the auto parts hub for North America and exports to the USA in 2006 totalled US$14.8 billion. The automotive sector in Mexico has attracted some of the largest Original Equipment Manufacturers (OEMs) from the USA and Japan (including Ford, General Motors, Chrysler, Nissan and Toyota). Mexico provides excellent opportunities for supply chains which want to be next to the USA market with the avantage of low-costs production.

The future of the Automotive sector in Mexico

In the past decade, Asian and European auto part suppliers have invested heavily in the USA. Investments by the major automakers and new free-trade activity are triggering further expansion. Also it needs to be taken into account the changes in EPA (USA Environmental Protection Agency) regulations will boost growth and prices for diesel engines from $6 billion in 2005 to approximately $10 billion in 2012.

Automobile suppliers now see Mexico as a viable production centre for all of North America. In the lastest news Ford is to invest $3bn in a new car plant in Mexico for the production of the Fiesta model (Source BBC). All this future expansions and investments will required components ranging from engineered parts to diagnostic and assembly equipment. Braking systems, electrical components, transmission and engine components, moulded plastic sections, stamped steel parts, steering assemblies, interior trims and lightweight alternative metals are all required.

Due to the strong demand and increased anticipated demand for these components, there are opportunities for:

Mexico’s low costs for prototype production are a major factor in its overall competitiveness and the size of its automotive industry. The city of Aguascalientes will be the headquarters of a plant to be built by European investors to produce hybrid and fully electric ecological cars for the Mexican and U.S. markets. (Source US Commercial Service)

Advantages for investors in Mexico in the Automotive industry: