Automotive Manufacturing in Mexico
Growth in Automotive Manufacturing in Mexico
According to figures compiled by the Mexican Association of the Automotive Industry (AMIA),
automotive manufacturing in Mexico produced approximately 2.6 million vehicles in the first three
quarters of 2019. This number represented a slight reduction of .9% when compared with the same
period during the previous year. Of the numbers cited for 2019, 2.3 million units were sent abroad. This
number represents a 1.5% increase in exports over the same period in 2018.
Government commercial data shows that the main destination of the production of automotive
manufacturing in Mexico was the nation’s two North American neighbors and top trading partners.
Exports to the United States and Canada made up 86.1% of the total motor vehicle units sent overseas.
Beyond North America, the third largest trading partner with Mexico in the automotive sector was
Germany during the period under examination.
Also, according to Mexican government statistics, the third quarter of 2019 showed decreases in the
production and export of light vehicles. This development occurred in response to changes in
production lines, as well as to a drop in demand in both Mexico’s domestic and export markets.
Although some industry watchers have had the expectation that Mexico will eventually produce five
million cars, Oscar Albin, Executive Director of the National Autoparts Industry Association (INA) believes
that changes in car consumption, principally in the United States, will have an effect on this projection.
According to the director of the INA, “Increasingly, the US consumer points to a preference in the
purchase SUVs and pickups. This has caused difficulties for the automotive manufacturing in Mexico
that is geared for the production of sedan-type vehicles.”
Albin also noted that world production of passenger vehicles today is an approximate cumulative total
of approximately 100 million cars a year, and, of this number, “the United States, Canada, Europe, Japan
and South Korea manufacture about 40 million units.” Albin went on to further observe that where new
automotive purchase numbers in North America have remained mostly constant over the last 30 years,
“the growth in sales is now in emerging markets such as Mexico and China, as well as in the nations of
Eastern Europe, India and South America.” In light of the fact that Mexico accounts for only 5% of the
world’s total automobile production, there is ample opportunity for automotive manufacturing in
Mexico to increase sales in these regions of the world.
Automotive Manufacturing in Mexico: The USMCA Region
The USMCA trading bloc is indisputably the most important market for the auto industry in Mexico. The
region as a whole (the United States, Canada and Mexico) produced approximately 16.7 million cars in
2019. Although the future is uncertain, as long as more than 16 million units are produced in North
America going forward, experts agree that the industry will do well. Of the approximately more than 16
million passenger cars that will be produced, it is estimated that automotive manufacturing in Mexico
will account 4 million of the total number.
A further breakdown of cumulative figures from January – August of 2019 demonstrates that Mexican
exports of automobiles were distributed as follows: The United States with 79.1%, Canada with 7% and
Germany with 3.8%. The vehicles shipped to the United States during this period numbered 1.8 million.
This figure represents 15.9% of the total US light vehicle sales in the market through the first eight
months of last year.
Autoparts Manufacturing in Mexico Thrives
Much of the value of automotive manufacturing in Mexico resides in the industry’s parts sector.
According to data provided by the Mexican National Autoparts Industry Association, it is forecasted that
the value of parts manufactured in Mexico during 2020 will exceed US $100 billion. A full eighty percent
of Mexico’s production will be consumed by buyers in the US market.
It should be noted, however, that among the automotive parts most exported from Mexico are wire
harnesses, seats and their parts, motors, gearboxes, die-cut parts, axles, braking mechanisms, lighting
appliances, airbags, seat belts, among others.
In terms of foreign direct investment, automotive industry capital continues to flow to the autoparts
manufacturing sector in Mexico.
According to data provided by the country’s Secretariat of the Economy, in the first half of 2019, net
investment in parts production totaled approximately US $1.7 billion. To a large extent, this figure
represents capital outlays by companies that will be suppliers to Toyota’s new plant, which is located in
Apaseo El Grande, Guanajuato. Toyota officials inaugurated the facility on Thursday, February 6, 2020.
The company’s second plant in Mexico was built at a cost of US $700 million. On top of this initial
investment, Toyota plans to commit another US $247 million to the production facility over the course
of the next nine years.
The new facility is expected to produce 100,000 Tacoma trucks per year and generate 1,000 jobs in the
area. Guanajuato economic development officials have noted that the new Toyota factory will also
bring a source of added revenue to other commercial and service sectors that will result in additional
benefits to the local economy.
Another large investment made in automotive manufacturing in Mexico during the past year was
undertaken by Germany’s BMW. The company opened a brand-new assembly plant on Thursday, June
6, 2019 in San Luis Potosí. Production at the facility will be dedicated to the G20 3-series. The plant
employs 2500 people that are tasked with assembling up to 175,000 cars per year. The investment will
also expand BMW’s autoparts supply chain footprint in the area.
Partnerships are important to the automotive industry in Mexico
In order for the automotive industry in Mexico to continue its present development and growth
trajectories, organizations such as the Mexican Association of the Automotive Industry (AMIA), the
Mexican National Autoparts Industry Association (INA), and the Mexican Automotive Distributors
Association (AMDA) must work together on formulating and implementing key strategies that are of
necessary for the health and growth of the sector. Among the issues that are particularly important to
the automotive industry in Mexico are:
- Ensuring technically and professionally qualified human resources are available
- Adjusting to new regulations that are applicable to vehicles and autoparts
- Strengthening supply chains in the national automotive industry
- Creating globally competitive tax incentives for research and development in the Mexican automotive industry
- Creating a resource fund specifically for the promotion of investment in research and development in the industry
- Strengthening interaction and promote greater industry-academic-research center linkages that are focused on automotive innovation and technological development projects
Expanding the supply chain of the automotive industry in Mexico
After the North American Free Trade Agreement was signed in 1994, Mexico’s automobile production
grew rapidly as a result of significant investments made in the country by both OEM assemblers and
In large part, automotive assemblers in Mexico have been successful in their efforts to persuade a
significant portion of their Tier 1 supplier base to follow them. Today, Mexico’s supplier base has
expanded to include 90 of the world’s top 20 Tier 1’s. The presence of these companies in Mexico
enable the national industry to manufacture virtually the total contents of a vehicle in the country.
Developing a Tier 2 Mexican supplier base, however, is another issue. Potential suppliers to the Tier 1s
must meet stringent global demands of quality and cost, as well as qualify for financing to run their
Despite these challenges, today there are some, but not many, Tier 2 suppliers that are comprised of
Mexican capital that have been successful in achieving the highest of quality standards in the industry.
Those that observe the automotive sector acknowledge that the opportunity to develop new Tier 2
companies is great, and, moreover, is needed for the automotive industry in Mexico to have a much
greater positive impact on the country’s economy.