Healthy U.S. light vehicle consumption fuels Mexican automotive production growth.
U.S. demand for passenger vehicles which is at its highest levels since 2007 is driving Mexican automotive production to new heights. According to figures provided by the Mexican Automotive Industry Association (AMIA), more than 2.3 million units were produced from the first month of 2014 through the end of September. This number represents an increase of seven and on-half percent over and above 2013 production for the same time period.
Eighty-three percent of Mexican automotive production is destined for export markets, while the remaining seventeen percent of the vehicles produced in Mexico are consumed within the domestic market. As might be expected the lion’s share of Mexican production for export has its destination within the United States. The top five export markets for Mexican automotive production, according to industry trade magazine, Mexico Now are:
- The United States is recipient of approximately seventy-one percent of Mexican light vehicle exports;
- Canada receives ten percent of Mexican automotive production;
- Brazil imports a bit over four percent of Mexico’s light vehicle output;
- Germany is the fourth largest consumer of Mexican automotive production at three and one-half percent;
- China receives almost two and one-half percent of Mexican produced vehicles
It is interesting to note that China, the fifth consumer of Mexican automotive production, held the seventh position just one year ago.
In addition to an overall unit of production percentage increase in the year over year period January through September, according to the Mexican Automotive Industry Association, exports rose by 8.7 percent. As a result of this increased activity, Mexico is on the verge of superseding Brazil as an auto producer on the basis of unit production. Due to significant receipt of foreign
direct investment in the sector over the past several years, Mexico is now the world’s fourth ranking exporter of light vehicle and ranks eight globally in terms of overall production. The rise in Mexican automotive production that has steadily occurred over the past several years has been fueled by significant investments in Mexican product by companies such as Mazda, Volkswagen, Nissan and Honda. It is expected that Mexico will continue to attract FDI to its automotive industry due to its proximity to the worlds largest market for passenger vehicles, the United States.
Over the last decade and a half, a bit over US $30 billion has been invested by foreign manufacturers in building capacity in Mexican automotive production. According to AMIA the automotive industry is the country’s largest recipient of foreign capital percentage wise. Automotive has received eighteen percent of FDI over the last fifteen years, while all other manufacturing has received a combined thirty-one percent of foreign direct investment.