Mexico’s automotive industry26.09.2013
Last year was the best year in the history of the Mexican automotive industry, with record production and export figures. Mexico manufactured 2.885 million units, representing a 12.8% increase over the previous year and strengthening the country’s position as the second largest producer of vehicles in Latin America. During 2007-2012, Mexico’s automotive industry attracted almost USD 19 billion in foreign direct investment, which provides the basis for the 39% increase in vehicle production to 4 million units by 2017, as forecasted by The Mexican Association of the Automotive Industry. Interviewed during the Bloomberg Economic Forum Eduardo Solis, director of the Mexican Association of the Automotive Industry ( AMIA ), confirmed that last year net foreign exchange was achieved of almost USD 36,000 million.
In 2012, also the auto parts industry reached its highest production level with a total value of USD 74,795 million. Mexico’s attractiveness as an auto part manufacturing location, offering a 13% cost advantage over the United States, already attracted 89 of the world’s 100 leading auto parts companies. Being the world’s fifth largest auto parts exporter, not less than 90% of Mexican auto parts exports went to the United States last year, representing one third of the total value of US auto parts imports. Accounting for 27% of Mexico’s total exports, the automotive industry is a key pillar of the Mexican economy and its primary source of foreign currency.
Mexico’s heavy vehicle segment is also on the rise. Last year, heavy vehicle production reached a record of 138,078 units, a 4% rise over the previous year and a vast increase from the production low of 54,642 units in 2009. Last year, heavy vehicle exports reached 104,155, an increase of 143.9% over 2009 exports. Economists said the automotive sector is serving as a ‘stunning development’, representing nearly 4 % of the Mexican GDP that will certainly reach 8% by 2018.
Mexico is destined to strengthen its position as a key player in the global automotive supply chain based on its competitiveness as a manufacturing platform, preferential access to markets in 44 countries across three continents, a highly skilled workforce, experienced and skilled auto parts suppliers, and a stable economic and political environment. Mexico produces about 9,000 engineers and technicians every year – that is more than leading automotive countries such as Germany, Canada and Brazil. These engineers have contributed to the industry in big innovations.
Driven by both increasing domestic demand and export volume, the Mexican automotive industry is expected to record a 5% annual growth between 2014 and 2015, and by 15% to 20% in the following years. Furthermore trade agreements have favoured the Mexican driveway to other markets, to this must be added the human resource specialization and sophistication that has reached the supply chain.
The intelligent manual labour that the Mexican automotive industry counts with has begun to attract investment of a different sort. Although most of the plants on national soil are production plants, these days there seems to be a rise of design plants as well.
As an educated labor force attracts more attention, the government is cooperating with their technical development. Oscar Albín Santos, president of INA, indicated that the SEP (Ministry of Public Education) is becoming involved in the development of high standards of the engineering career in order to be able to compete with the top designers of the world. To date, five projects have been developed such as problem resolution through technology, basic industrial maintenance and the development of auto part assembly lines. Also, due to demand, some schools are specializing on automotive engineering such as the BUAP (Benemérita Universidad Autónoma de Puebla) in Puebla which will offer this career starting in August 2013.
Mexico is considered a competitive cheap labor market (with salaries around 50% of what is paid in the U.S. and Western Europe) which offers quality – educated, capacitated – labor at a much lower price than the other capable labor markets in the world.