Mexico goes for the fourth place in the world in auto parts production

By 2023, the production of auto parts in Mexico would reach an annual value of 102,000 million dollars, which would position the country in fourth place in the world for the manufacture of parts and components for vehicles.

Currently, the country is in fifth position globally, according to the projections shared by Alberto Bustamante , interim executive president of the National Auto Parts Industry (INA) , during a webinar organized by Mexico Industry.

The estimated figures for said annual production in 2021 add up to 94,000 million dollars. Therefore, if it reaches the goal for 2023, Mexico would surpass Germany , which today holds the fourth global position for auto parts production.

OPPORTUNITIES

The forecast for 2023 was established based on the opportunities that the country has in the face of various situations that occur in the region and in the world. The increase in regional content required by the T-MEC  for vehicles manufactured in North America (from 62.5% to 75%), the logistics crisis, as well as the trade war between the US  and China , are among these favorable factors .   

“The US has imposed tariffs of 25%, the equivalent of 250,000 million dollars to China . China has lost ground in components and auto parts, as tariffs take you out of the market. It is one of the reasons why consumption has increased in the Mexican market ”, said the expert. 

Likewise, the US negotiations with Europe to reduce the taxes imposed on US vehicles represent another opportunity for the Mexican industry. 

“A vehicle made in Europe that wants to enter the US  pays a 2.5% tariff, but a vehicle made in the United States , to enter Europe must pay a 10 percent tariff. These negotiations that the US is carrying out are going to eliminate these tariff barriers and what they are going to cause is that more and more vehicles made in that country are sold in different parts of the world ”.

The benefit for Mexico is significant, the expert added, as each car manufactured in the neighboring northern country has the equivalent of $ 5,000 worth of auto parts made in Mexican territory. 

The main products that Mexico exports from this sector are: harnesses, wires and cables; die-cut parts and accessories for car bodies; seats and their parts; gearboxes and parts thereof; brake mechanisms; internal combustion engines and lighting and visual signaling devices, among others.

In sum, the exports placed in the US by  the Mexican auto parts sector are greater than those of vehicle assemblers based in Mexico .

During 2021, according to INA estimates , auto parts exports totaled 69.156 million dollars; while those obtained by light vehicles would be 48,748 and those of heavy vehicles, 11,861.

“See how strong the auto parts industry is. If we put together the sum of light and heavy, we do not reach what Mexico is exporting in auto parts. […] The strength has always been given by the auto parts sector ”, stressed the interim president.