Mexico Country Commercial Guide

Mexico Country Commercial Guide

Automotive Industry

Mexico Country Commercial Guide is a major market for U.S. passenger vehicles, light vehicles, trucks, auto parts, supplies, and technologies required for electric vehicles. The automotive sector is one of Mexico’s most significant industries, comprising 3.6 percent of the nation’s Gross Domestic Product (GDP), 18 percent of the manufacturing GDP, and employing over one million people nationwide.

Overview

Mexico Country Commercial Guide is the world’s seventh-largest passenger vehicle manufacturer, producing 3.5 million vehicles annually. Eighty-eight percent of vehicles produced in Mexico are exported, with 76 percent destined for the United States. Established automakers in Mexico include Audi, BMW, Ford Motor Company, General Motors, Honda, Hyundai, Jac by Giant Motors, Kia, Mazda, Mercedes Benz, Nissan, Stellantis, Toyota, Volkswagen, and Tesla, which recently announced a new plant to be built in the state of Nuevo Leon as part of its electric vehicle production. Mexico Country Commercial Guide.

Mexico Country Commercial Guide is the world’s fifth-largest manufacturer of heavy-duty vehicles for cargo, hosting 14 manufacturers and assemblers of buses, trucks, and tractor trucks, and two manufacturers of engines. These producers have 11 manufacturing plants that support more than 28,000 jobs nationwide. Mexico is the leading global exporter of tractor trucks, 95.1 percent of which are destined for the United States. Mexico is also the fourth-largest exporter of heavy-duty vehicles for cargo and the second-largest export market after Canada for U.S. medium and heavy-duty trucks. Top players include Cummins, Detroit Diesel Allison, Freightliner-Daimler, Kenworth Mexicana, Mack Trucks de México, International-Navistar, Dina, Scania, Volvo, VW, Man Truck & Bus, Mercedes-Benz, Hino Motors, and Isuzu Motors.

Automotive manufacturers are primarily concentrated in the northern region of Baja California, Sonora, Chihuahua, Coahuila, Nuevo León, and San Luis Potosí. Original equipment manufacturer (OEM) plants are also based in Guanajuato, Aguascalientes, Jalisco, Estado de Mexico, Hidalgo, Morelos, and Puebla. In terms of supply chains, auto parts producers are located close to these plants, primarily in Coahuila, Chihuahua, Nuevo León, Guanajuato, Queretaro, Puebla, Tamaulipas, San Luis Potosi, and Estado de Mexico, although they are also found in other parts of the country. The heavy-duty vehicle manufacturing plants are mainly concentrated in northern Baja California, Coahuila, Nuevo León, San Luis Potosí, Jalisco, Guanajuato, Querétaro, Hidalgo, and Estado de Mexico.

The United States-Mexico-Canada Agreement (USMCA), which went into effect on July 1, 2020, included changes to the rules of origin for the automotive sector. The USMCA requires that 75 percent of a vehicle’s content (70 percent for heavy trucks) be produced in North America, and that core auto parts originate from the United States, Canada, or Mexico. Following a phase-in period ending in 2023 for vehicles and 2027 for trucks, only goods meeting these content requirements will receive duty-free access. For additional information, please visit the Office of United States Trade Representative (USTR) website or see USTR’s USMCA U.S Automotive Sector Impact Analysis. Mexico Country Commercial Guide.

The USMCA requirements for the automotive industry are likely to provide new business opportunities for U.S. exporters with local OEMs and other suppliers in Mexico looking to increase the percentage of inputs in their supply chains from North American sources. The U.S. Commercial Service Mexico has prepared a helpful guide, which provides information on the USMCA and its implications for the auto sector. To access this report and other useful USMCA information, please visit our website. Mexico Country Commercial Guide.

Table 1: Mexico Passenger Vehicle Sales in Mexico
(Figures in Thousands of Vehicles)

*Total market size = (total local production + imports) – exports
Source: Mexican Automotive Industry Association (AMIA) and ITA Office of Transportation and Machinery

Vehicle Market in Mexico
(Figures in USD Billions)

*Local production was provided by the INEGI (the National Institute of Statistics and Geography) with figure in Mexican pesos and converted into U.S. Dollars; there are no statistics available for 2022 or estimates for 2023
Sources: INEGI and ITA Office of Transportation and Machinery. Mexico Country Commercial Guide.

Mexico is the largest export market for U.S. automotive parts and the fourth-largest producer of automotive parts worldwide, generating USD 107 billion in annual revenues. The size of Mexico’s passenger vehicle market and the shared border between the United States and Mexico generates a robust demand for U.S. original equipment and aftermarket auto parts. Mexico Country Commercial Guide. Mexico Country Commercial Guide.

The most effective way for U.S. suppliers of auto parts and equipment to enter the Mexican market is through local representation or regional distribution. Assembly plants prefer suppliers who are located close by to minimize inventory volumes and to facilitate just-in-time or just-in-sequence deliveries. It is easier to serve OEMs in Mexico if the U.S. exporter is already supplying them in the United States and has a supplier number. Mexico Country Commercial Guide.

Automotive parts related to components for Tier 1 or Tier 2 suppliers represent the most exported items from the United States. However, opportunities exist for production motors, plastic metal hybrid components, steering casting, stamped parts, connectors, machining of high-precision parts with secondary operation, machinery and equipment, materials, pre-assembled components, cold and hot forging, aluminum die casting molds, molds, tooling, cutting tools, automation process equipment, raw materials, finished parts, and accessories. Mexico Country Commercial Guide.

As automotive technology becomes more sophisticated, Mexico will search for solutions including big data, wireless technologies, electronic cards, data analytics, electrification, and innovation. U.S. exporters that also support their own design, engineering, research, and development of product lines with quality, certifications, price competitiveness, speediness, along with a strong sub-supplier chain, project management, flexibility, and adaptability, are in a better position to serve automotive market customers and others in the advanced manufacturing sector. The main competition for original equipment parts is from domestic manufacturers, as well as from China, Japan, South Korea, Germany, and Canada, among other countries. Mexico Country Commercial Guide.

Table 2: Mexican Auto Parts Market for OEM and Aftermarket
(Figures in USD Billions)

*Total market size = (total local production + imports) – exports
Source: National Auto Parts Industry Association (INA) and ITA Office of Transportation and Machinery

Leading Sub-Sectors and Opportunities

There are five major sub-sectors in Mexico’s automotive industry: original equipment (OE) parts, aftermarket parts, electric and hybrid vehicle parts, specialty equipment, and remanufactured products. Of these sub-sectors, the U.S. Commercial Service Mexico sees strong opportunities in OE parts, aftermarket, and electric vehicle (EV) parts. Mexico Country Commercial Guide.

The market for EVs is evolving rapidly in Mexico as automakers have announced ambitious strategic goals to transition their offerings from gasoline to electric vehicles. These plans also include reducing their own carbon footprints and those of their tier suppliers. While the market for EVs and hybrids totaled only 51,065 units in 2022, this represented a growth of 8.5 percent compared to 2021. Hybrid vehicles represent 3.75 percent of total EV market, followed by EV (0.51%) and Plug-In-Hybrid vehicles (0.42 %). To learn more about these opportunities, please refer to the web resources below. Mexico Country Commercial Guide.

Find out more about electric vehicle opportunities in Mexico in ITA’s Clean Tech Top Export Market Ranking.

Resources

Events

1. INA Paace Automechanika (Aftermarket/OE/Accessories) July 12-14, 2023. Mexico City
2. Expo Transporte ANPACT (Transportation and Buses) November 15-17, 2023. Guadalajara, Mexico
3. Automotive Meetings (OE market) February 20-22, 24 (biennial). Santiago de Queretaro, Queretaro
4. International Automotive Industry Supply Summit May 7-8, 2024. Santiago de Queretaro, Queretaro