During the end of the month of April, the NAFTANEXT Summit took place at the Palmer House Hotel in Chicago, Illinois.

This was a tri-national gathering organized for the purpose of bringing together policymakers, thought leaders and stakeholders from the three NAFTA signatory nations for the purpose of looking at the NAFTA from a retrospective and prospective vantage point.

Automotive linkages between the US and Mexico was the title of a presentation made by Thomas Kier, Senior Economist and Research Advisor at the Federal Reserve Bank in Chicago for those in attendance.

Automotive linkages between the US and Mexico run deep

The U.S., Mexico and Canada all contribute to the production of passenger and light vehicles in North America. Numbers for 2012 indicated that of the approximately 15.5 million units manufactured in North America, 64.5% were built in the United States, while 19.4% and 16.1% were assembled in Mexico and Canada respectively.

Mexico is becoming an increasingly important player in both the North American and global automotive manufacturing world. Whereas by 2020, the U.S. will still be the continent’s main producer of passenger vehicles with 65.7% of an estimated 17.8 million units, Mexico will continue to gain in capacity when compared to the third NAFTA partner. It is estimated that Mexico will be the source of 20% of new units built, while the Canadian share will drop to 11.3%. Recently Mexico became the eighth most prolific manufacturers of automobiles in the world, and surpassed Japan as the largest supplier of exported vehicles to the United States.

Klier’s NAFTANEXT Summit presentation is the source of a series of excellent graphics that illustrate the number, quality and depth of existing automotive linkages between the US and Mexico.Information provided illustrates:

  • The total geographical specifc vehicle production in the three NAFTA countries.
  • The share of light vehicle production that each country contributes to the region’s gross production.
  • Quantitative and endd marketinformation demonstrating the role of exports in the NAFTA region automotive industry. Klier demonstrates that in 2013, eighty 82% of Mexican passenger vehicle production was exported.
  • The location of automotive assembly plants in Mexico

In his summary, Thomas Klier concludes that while Canada’s share of overall NAFTA region light vehicle production is diminishing, automotive linkages between the U.S. and Mexico are becoming stronger,and, that, today’s North American automotive industry is characterized by a high degree of integration.

To access Thomas Klier’s NAFTANEXT Summit presentation, click on the link provided below:

Automotive linkages between the US and Mexico