While 2018 was filled with uncertainty, Mexico could be on the verge of a new start. President Andrés Manuel López Obrador seems willing to support the development of Mexico’s automotive industry and a US-Mexico trade deal could boost Mexico’s investment appeal. State of the Industry offers an overview of the advances in the automotive industry between 2H18 and 1H19. Public authorities, associations and industry leaders present their perspectives on Mexico’s opportunities to consolidate as an automotive hub.
NAFTA renegotiations were a wake-up call for Mexico. Although the country offers cost advantages, its industry still lags in providing the right support for new projects. Local players must harness the advantages that new companies bring to effectively insert themselves into the global industry. National Champions helps the reader understand the position of Mexico within global automotive value chains by featuring the perspective of Mexican companies wanting to strengthen their position as OEMs or suppliers.
US President Trump has maintained an America-first policy but the development of the automotive industry is a regional effort that cannot be subject to the interests of a single country. Automotive players have lobbied the US to keep the industry growing despite threats of tariffs and other trade barriers. In this chapter, US OEMs, suppliers and associations share their views on how regional integration boosts the growth of a North American block. New US investments and collaboration projects between both countries are highlighted.
Mexico has attracted investments from all over the world and European players have been active in the development of new projects. BMW and Mercedes-Benz are the latest entrants to Mexico’s auto industry with a subsequent wave of investments from suppliers eager to supply these players. This chapter includes the perspectives from European OEMs and suppliers on Mexico’s automotive sales, exports and production. German presence stands out in the country but other European participants are boosting Mexico’s automotive competitiveness.
Japan’s grip on Mexico’s auto industry is unquestionable. These OEMs are leaders in both sales and production and their quality standards are emulated worldwide. However, new contenders are ready to contend in the country. South Korean cars are increasingly favored and dark horse China threatens to disrupt the industry’s dynamics. This chapter focuses on OEMs and suppliers from Japan, South Korea and China and their perspectives for Mexico and on the opportunities for local players to enter their supply chains.
Automotive has been a key sector driving the Industry 4.0 revolution. To increase production volumes and meet global demands, OEMs and suppliers are adopting new manufacturing technologies and digitalization to boost productivity and curb human errors. However, many Tier 2, 3 and 4 suppliers still have to embrace the trend. In this chapter, automation, digitalization and robotics players showcase how Mexico can consolidate its position in automotive through the use of new technologies and production standards.
Although Mexico is renowned for being a low-cost manufacturing hub, it already participates in higher value-added operations. Companies trust local businesses to carry out engineering and design activities and local R&D centers and academic institutions are working on projects that could shape the future of the automotive industry. In this chapter, key public and private projects oriented to boosting Mexico’s position as an engineering and design hub are presented to highlight how Mexican talent helps to advance the industry.
Prior to venturing into Mexico, foreign companies must understand the market. Legal, labor and economic factors are important when choosing where and how to invest and finding the right partner to ensure a soft landing is key for newcomers. This chapter presents the thoughts of leaders from industries that support the Mexican automotive sector on how to do business in the country and their perspective on the best opportunities for new players to grow based on the market’s development and industry trends.
A poor choice when determining a location to set up operations leads to added costs in transportation, utilities, labor and trade. The successful establishment in a place where companies are connected to their clients and suppliers enables a much quicker ramping up of operations. This chapter highlights the most important factors to consider when looking for a new investment destination in Mexico. Industrial real estate developers present their views on the advantages that different locations offer and the best way to curb costs.
Supply chain development requires a strong international logistics network. Companies must ensure that their products and inputs are available when they are needed to meet OEMs’ just-in-time and just-in-sequence requirements. Mexico is a natural logistics hub but the country still needs to boost its logistics capabilities to compete against other countries. In this chapter, freight-forwarders, shipping companies and customs operators showcase their ability to support automotive companies despite Mexico’s logistics challenges.
Goods and inputs may arrive to or leave Mexico by boat, plane or train but trucks are king among transportation means in Mexico, both for cargo and passengers. As cities grow, mobility has become an issue for an infrastructure that can no longer support the number of vehicle-based trips completed every day. This chapter focuses on truck and bus fleets’ views on the most pressing needs of the road-based transportation industry. Additionally, novel mobility alternatives aimed at alleviating urban traffic congestion are presented.
For many companies, security is an issue that prevents free growth of investment projects. Road freight is constantly compromised and crime rates in cities are a challenge for executives who want to attract labor from abroad only to fail due to the country’s negative security image. In this chapter, a variety of industrial service suppliers showcase their solutions, including telematics, armoring companies and industrial safety solutions, for the security risks plaguing the automotive industry.
The Mexican automotive market is entering a stabilization period. After years of double-digit growth, OEMs and distributors must get used to lower sales while finding ways to improve profit margins. Collaboration with financing and insurance partners is key to sustaining growth and retaining market share until the next upward slope. In this chapter, entities in these three sectors highlight how Mexico can strengthen its domestic market in the face of growing inflation, high interest rates and low consumer confidence.
The Mexican aftermarket remains a strong segment for the national industry and experts forecast growth fueled by record car sales in 2015 and 2016. The challenge for this sector is digitalization and a more diversified vehicle park with more brands, models and versions. The final chapter of Mexico Automotive Review 2019 brings manufacturers and distributors of spare parts and large workshop chains together to discuss the challenges and opportunities to grow in a price-driven segment with a digitally-oriented customer.
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Mexico Automotive Review is the ultimate information platform regarding the automotive industry. These pages put readers inside the minds of the leaders shaping the future of the sector, including public sector decision-makers and C-level executives from OEMs and top Tier 1, 2 and 3 suppliers. Join our elite group of interviewees and share your expertise with the rest of the automotive value chain.
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Cutting-edge information based on more than 180 interviews with the most influential business leaders in the Mexican automotive industry, the country’s political leaders and key policymakers
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ECONOMIC CORNERSTONE FACING HEADWINDS
The automotive industry remains a cornerstone for the Mexican economy, contributing 3.5 percent of national GDP and 20.2 percent of manufacturing GDP. Investment flows continue to arrive unabated and the country has strengthened its position as the world’s seventh-largest light-vehicle manufacturer and the third-largest light-vehicle exporter. However, changes in global demand and the threat of a redefined trade relationship with the US, its main commercial partner, have clouded the country’s prospects.
Domestically, two years of record-breaking sales and seven years of undisrupted growth are now showing signs of wear with results decelerating. Contracting sales in an already extremely competitive market have forced companies to come up with new strategies to retain their position in the market.
During these challenging times, Mexico Automotive Review provides insight into companies’ views regarding Mexico’s position as an automotive manufacturing destination. Throughout its 14 chapters, success stories are highlighted from companies that maintain strong growth despite market obstacles, while other players share their concerns regarding the main areas of improvement. 2018 is also a transition year for the federal government and in this edition, Mexico Automotive Review includes a special feature on Andrés Manuel López Obrador, his projected plans for the automotive industry in Mexico and the thoughts of key leaders at the dawn of a new political era.