The Mexico automotive industry and its potential

Being the seventh largest vehicle manufacturer in the world, Mexico’s annual exports of both heavy and light vehicles total to approximately 2.7 million units per year.  The country also boasts of an establishment of 33 OEMs and 800 auto parts companies.

Figures prove that Mexican automotive industry production has been steadily rising since 2009. Most auto production establishments in Mexico are located in the Northern and Central regions of the country. These include big-wig manufacturers such as Toyota, Chrysler, Nissan, Ford, VW- MAN and many more.

The automotive industry in Mexico

It’s no wonder that the Mexican automotive industry is considered to be the main sector for manufacturing, exports and employment in the country.

Data points that shows why auto manufacturing is considered a key contributor to the Mexican economy:

  • The automotive industry accounts for 47.7% of total manufacturing in Mexico
  • Its annual contribution to the GDP was 87.3 billion USD in 2014
  • 27.5% of all exports in Mexico are from the Automotive industry
  • In the year 2014, Mexico’s automotive industry created 770,000 direct jobs in Mexico.
  • Automotive industry has attracted FDI of 5.8 billion USD between 2014 to March 2015
  • The Mexican automotive industry has 360 facilities dedicated to Research and Development.

Prospects & opportunity

As the establishment of new OEMs is underway, a further growth has been predicted for the automotive industry in the years to come. With only six new OEMs starting operations, production is expected to grow to over +1.5 million units in less than 5 years.

Even though the Mexican industry thrives on manufacturing light vehicles, the heavy vehicle segment is growing by leaps and bounds and this trend is expected to be on the rise for the next 5 years.

Mexico’s major imports in the automotive sector

If we talk about the main export destination for the Mexican Automotive industry, it’s no other than the USA, with 71% of light vehicles and 90% of heavy vehicles load being exported from Mexico as per 2014 figures.

With a 12% stable growth rate, Mexico is also the 5th largest importer of auto parts in the world. Motors, harnesses, seats & parts, copper, aluminum & other cables for electric systems, crankshafts, brakes and its parts, transmission systems, safety seat belts and its parts constitute the major imports in the auto parts sector for Mexico.

What makes Mexico a potential market for OEMs and auto part suppliers?

The prospects of the Mexican automotive industry seem positive and growth oriented as evident by several supporting factors like:

  1. Committed effort by the ministry of economy to develop local providers to improve supply chain management.
  2. The US sustaining its position as main export destination for Mexico with a healthy 18% annual growth rate.
  3. The open economy and the free trade policy as well as tax incentives make Mexico an ideal manufacturing hub.
  4. Several new OEMs and auto part suppliers  that enjoy favorable trade benefits in Mexico.
  5. The consistent rise in OEMs and increase in vehicle production generate opportunities for new companies that wish to enter the market.

Hence, with a ready established market, the Mexican automotive sector is a developed and dynamic one. Due to high demand, prospects in the auto and auto parts industry are expected to continue to be favourable for a long time. For accurate information on the Mexican auto market however, in depth study and good business plan may assist you in identifying specific need gaps that can be filled towards a profitable end for all.

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