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Automotive Parts and Supplies

Overview

Auto Parts Production for OEM and Aftermarket

 

2009

2010

2011

2012 (est.)

Total Market Size

58.6

69.4

80.2

80.8

Total Local Production

41.2

57.5

66.9

68.0

Total Exports

35.9

37.9

45.1

45.9

Total Exports to the US

32.31

27.7

40.2

41.1

Total Imports

18.5

26.0

31.8

33.1

Total Imports from the US

10.36

16.9

18.4

18.2

Figures in USD billions.

Source: National Auto Parts Industry Association (INA)

Total Number of Vehicles – Automobiles and Trucks

 

2009

2010

2011

2012 (est.)

Total Units Produced

1,507,527

2,260,774

2,557,550

2,791,292

Total Units Sold in Country

754,918

820,406

905,886

990,175

Total Units Imported

730,000

848,000

873,440

898,440

Total Units Exported

1,223,333

1,859,517

2,143,879

2,427,879

Figures in units.

Source: Mexican Association of Automotive Industry (AMIA), Secretary of Economy and estimates from Business Monitor International

Total Value Vehicles – Automobiles and Trucks

 

2009

2010

2011

2012 (est.)

Mexican Exports of Vehicles to the US

878,742

1,277,184

1,440,481

1,447,425

Mexican Imports of Vehicles from the US

2,351

3,122

3,215

3,308

Figures in USD billions.

Estimates reflect a composite of Transportation and Machinery Office Statistics, US Department of Commerce (OTM)

Mexico ranks as the 8th largest vehicle producer in the world, and the automotive sector accounts for 17.6 percent of Mexico’s manufacturing sector and 3 percent of its national GDP contribution. There are currently nine manufacturers in Mexico including General Motors, Chrysler, Ford, Nissan, Fiat, Renault, Honda, Toyota, and Volkswagen. This manufacturing base produces 42 brands in 20 manufacturing plants. Nissan and Daimler are considering opening another manufacturing plant in Mexico to increase passenger car production. Nissan, GM, Volkswagen, and Honda plan to increase their production in Mexico. Fiat and Mazda are opening up plants for vehicle production in Mexico.

Mexico produces more than 2.5 million cars on a yearly basis. 83 percent of its production is devoted to exports and the remaining 17 percent for the domestic market. The National Auto parts Industry Association (INA) reported a significant increase in the auto parts industry from 2011 to 2012 as per estimates.

In 2011, the Mexican automotive industry experienced a 13.1% percent growth of local vehicle production due to higher demand, domestically as well as in the United States and other markets. The countries that Mexico exports to include: United States (64%); Canada (7%); Latin America (15%); Asia (2%), Europe (10%) and others (1%). Mexican vehicle sales in 2011 increased 10.4% compared with 2010. Market realities have led to new trends in car manufacturing, including smaller car sizes and increased fuel efficiency.

The aftermarket is expected to increase, as Mexico imposed new duties and requirements on the importation of used vehicles since 2009. As a result, repairing and maintenance of used vehicles will require varied parts. In addition, other opportunities exist for U.S. exporters of spare parts, equipment and new technologies oriented to reduce costs and time. Parts equipment and first and second-tier components from the United States might experience an increase in exports as auto production increases in Mexico.

The economic outlook for 2012 is conservative. Mr. Oscar Albin Santos, President of the National Auto Parts Industry expressed that the auto parts industry might report a production increase of one percent, an import increase of six percent and auto part export decrease of 4% by the end of 2012.

Furthermore, Eduardo Solis, Chairman of the Mexican Auto Association, acknowledged that the industry’s situation remains linked to the economy and financial environment and forecasts a challenging 2012. To increase the demand in new car sales, the industry and the government will have to work on other strategies to target niches in the domestic market. The industry is currently working with the government to reduce taxes for purchasing a car, trade-in car replacement programs, among others. Despite the slow growth in demand and production, some automotive companies announced large investments in Mexico last year. This is due to Mexico’s advantage in low labor costs and recent technological development in the auto industry through design centers. In addition, companies are looking for lower manufacturing and export costs.

Best Prospects / Services

The greatest opportunities include: spare and replacement parts for gasoline and diesel engines, electrical parts, collision repair parts, gear boxes, drive axles, catalytic converters, and steering wheels. In the first and second-tier supply chain sector, opportunities include: OEM parts and components, precision assembly devices, machined parts, hybrid vehicle components, suspension systems, and pre-assembly components such as small and progressive stampings. Other products in demand include electronic components, specialized tooling, systems that eliminate waste and green technologies such as new combustion systems to reduce gas emission and oil consumption.

Opportunities

Despite the economic recovery, lack of financing, high interest rates and competition, the market has become more price-sensitive. In Mexico, 50 percent of new cars are purchased on credit. Because of the credit shortage, new car sales have decreased and many consumers choose to maintain their vehicles for a longer period of time. As a result, President Calderon eliminated the ownership tax imposed to consumers effective Dec 31, 2011, with the exception of luxury vehicles. It is now the option of the Mexican state where the car is purchased to decide whether to charge this tax. Many Mexican states have decided not to charge this tax. This measure should stimulate the domestic market and the purchasing of new vehicles. In addition, OEMs located in Mexico will continue implementing strategic actions such as expanding their manufacturing base and upgrading their brand vehicles with new technologies to make them more efficient and affordable to consumers.

The large number of used vehicles being driven in Mexico provides opportunities for exports of repair equipment and replacement parts. Effective January 2009, Mexico imposed a 10 percent duty on imports of used vehicles, which was decreased to 3 percent only for the border zone in March 2009. In 2012 used cars 8-10 years old can be imported and in 2013 used cars6-8 years old can be imported. U.S. companies still face some barriers when exporting used cars to Mexico.

The most significant requirements include having a Certificate of Origin, and the 10 or three percent tariff based on a minimum estimated price, or “reference price” for the given year, make, and model of the car. Importers of used vehicles must post a guarantee representing any difference in duties and taxes if the declared customs value is less than the established reference price. Effective November 2011, the Mexican government set up a mandatory emission control standard for the import of used vehicles. To avoid red tape, U.S. exporters can attach emission control state certificates from Arizona, California, Texas and New Mexico as those states show very strict standards which are compliant with Mexican standard 041. Therefore, U.S. exporters are advised to work closely with their importers and customs brokers to ensure that all specific requirements are met.

Participation in Mexican automotive trade shows provides excellent opportunities to introduce new products and services in Mexico, after appointing regional distributors.

PAACE Automeckanicka 2012, July 18-20, 2012, Mexico City: http://www.paaceautomechanika.com/

RESOURCES

National Auto parts Industry Association:

http://www.ina.com.mx

Mexican Association of Automobile Distributors:

http://www.amda.org.mx

Mexican Association of Automotive Industries:

http://www.amia.com.mx

Business Monitor International

http://www.businessmonitor.com

Global Trade Atlas

http://www.gtis.com

Office of Transportation and Machinery

http://www.trade.gov/auto

For more information on the automotive parts and supplies sector in Mexico, please contact:

Monica Martinez, Commercial Specialist

Monica.Martinez@trade.gov

U.S. Commercial Service, Mexico City

Tel: (011-52-55) 5140-2628

Fax: (011-52-55) 5566-1111