Growth in the Mexican automotive industry spurs investment throughout the supply chain
The steady and significant growth in the Mexico automotive industry is provoking suppliers to ramp up capacity and capability.
A Major Global Player
Anyone that is monitoring Mexico’s automotive sector has noted that, over the last several years, the nation’s industry is increasingly becoming a major global player.
As early as 2009, Mexico broke into the ranks of into the world’s ten leading automotive manufacturing countries. In ensuing years, growth in the Mexican automotive industry made the nation seventh worldwide in terms of overall unit production, and has made it the fourth largest exporter of autos on the planet. Mexico is only surpassed by Germany, the United States and Japan in foreign passenger vehicle sales.
In 2014, Mexico registered a personal best in terms of its impressive output. During the last year, Mexican based OEMs churned out 3.2 million vehicles, which represented an increase in production of approximately ten percent over 2013 numbers. Experts estimate that, by the end of the present decade, capacity will exceed five million vehicles annually.
Suppliers of goods and services expand capacity
As a result of exponential growth in the Mexican automotive industry, suppliers of goods and services are making sizable investment in anticipation of the need for greater capacity. One such example of this circumstance is recent purchase of eight hundred and seventy-five bi and tri-level box cars by Ferromex. Ferromex is the private rail consortium that operates the largest railway, by mileage, in Mexico. The box cars have been purchased specifically for the transport to market of the increased number of passenger vehicles that growth in the Mexican automotive industry will undoubtedly demand. This year, for instance, Ferromex officials anticipate that the railroad’s equipment will move 1.9 million units to market from twelve production plants located throughout the country. Ferromex is one of two rail lines that moves seventy percent of Mexican automotive output.
According to a ranking company official, “The acquisition of additional 875 bi and tri-level box cars will give Ferromex the capability to move compact, medium-sized and large vehicles to the North American and world markets, by enabling us to transport more units to Mexico’s northern border and to its port network.”
To a great extent, because of the growth in the Mexican automotive industry in recent years, Ferromex and Ferrosur, the segment of Ferromex that serves the south-eastern regions of Mexico that includes the important Port of Veracruz, anticipate their total investment in infrastructure and other upgrades to its Mexican transportation and logistics capabilities to total approximately US $411 billion. Currently the automotive industry in Mexico accounts for six percent of the nation’s GDP and eighteen percent of the nation’s industrial output. Growth in the Mexican automotive industry will produce a multiplier effect that will spur investment throughout the supply chain, as well a general economic growth, for the foreseeable future.