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Mexican automotive manufacturing sector is closing in on other NAFTA countries

Mexican automotive manufacturing sector is closing in on other NAFTA countries

The Mexican automotive manufacturing sector is surging, rapidly closing the gap between other manufacturing countries and its NAFTA neighbors, Canada, and the US.

Mexican Automotive Manufacturing Sector

Mexico has a thriving automotive sector, and it’s getting bigger. In just the last five years, over $24 billion USD in new investment has come to Mexico. The country is one of the fastest growing manufacturers of automobiles and auto parts in the world, producing for leading automotive companies like GM, Chrysler, BMW, Mercedes-Benz, and Ford. In light vehicles that sell for $20,000 or less, Mexico dominates, boasting eighteen production facilities in eleven Mexican states. Standing alone, Mexico has a clear identity as a leader in automotive manufacturing. But when compared to fellow NAFTA members, US and Canada, Mexico’s growth in this sector is even more impressive.

NAFTA Dynamic

The US is the clear leader in vehicle production among the NAFTA trio. But Mexico has taken strides in recent years and even months that show just how much the country is capitalizing on the NAFTA dynamic and claiming more and more of the automotive pie from year to year. A look at the following statistics tell the story plainly.

  • Since the implementation of NAFTA two decades ago, Mexico’s production of light vehicles has tripled from 1.1 million units to 3.3 million.
  • During this time, US production slipped from 12.2 million to 11.6 million while Canada maintained 2.3 million.
  • In 1990, the Mexican automotive manufacturing sector share of North American light-vehicle production was 6%; it is now approximately 20%.
  • During this time, US share dropped from an overwhelming 78% to a current share of 67%.
  • Whereas other vehicle producers like China and the US produce primarily for domestic markets, Mexico is leveraging NAFTA and other foreign trade agreements; the country exports 75% of manufactured vehicles within NAFTA.
  • In 2001, Canada ceased to be the largest foreign supplier of automotive parts to the US; since that time, Mexico has replaced their NAFTA neighbor in this role.

While the US is still the clear NAFTA leader for automotive manufacturing, Mexico is utilizing their position within NAFTA to the fullest and rapidly gaining a larger market share in this sector, and more assembly plants come online regularly. As the focus shifts to a regional model for global competition, Mexico is an increasingly valuable NAFTA member in the automotive market.

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