Automotive Parts and Supplies

Overview

Auto Parts Production for OEM and Aftermarket

 

2008

2009

2010

2011 (est.)

 

Total Market Size

55.4

58.6

71.0

74.4

Total Local Production

58.3

41.2

60.0

63.0

Total Exports

25.5

35.9

37.0

38.1

Total Exports to the US

22.9

32.31

27.7

28.5

Total Imports

28.4

18.5

26.0

26.7

Total Imports from the US

15.9

10.36

16.9

17.4

Mexico ranks as the 10th largest vehicle producer in the world, which accounts for 17.6 percent of the manufacturing sector and 3 percent of Mexico’s GDP. Mexico’s auto parts industry is closely linked to the U.S. industry. There are currently seven manufacturers in Mexico producing 40 brands in 20 manufacturing plants. Mexico produces more than 2 million cars per year. 79 percent of its production is devoted to exports and the remaining 21 percent for the local market.

In 2010 the Mexican automotive industry experienced an 11.5% percent growth in vehicle production. The market realities have led to new trends in car manufacturing, including smaller car sizes and increased fuel efficiency.

The spare parts market is expected to increase after Mexico imposed new duties on the importation of used-vehicles in 2009. As a result, repairing and maintenance of used vehicles will require various parts. In addition, other opportunities exist for U.S. exporters of spare parts, equipment and new technologies oriented to reduce costs. Parts, equipment and first and second-tier components from the United States might experience an increase in exports due to an increase of Mexican production of new models that have shifted from U.S. assembly plants.

The economic outlook for 2011 is conservative. Mr. Agustin Rios, President of the National Auto Parts Industry expressed that the auto parts industry might report a decrease of 4% by the end of 2011. Furthermore, Eduardo Solis, Chairman of the Mexican Auto Association, acknowledged that the industry’s situation is linked to the economy and financial environment. He expects car sales to increase by approximately three percent in 2011. The industry is currently working with the government to reduce taxes for purchasing and owning a car, an old car replacement program, among others. Despite the decline in demand and production, some automotive companies announced large investments in Mexico last year. This is due to Mexico’s advantage in low labor costs and recent technological development in the auto industry. In addition, companies are looking for lower manufacturing and export costs.

Best Prospects/Services

The greatest opportunities include: spare and replacement parts for gasoline and diesel engines, electrical parts, collision repair parts, gear boxes, drive axles, catalytic converters, and steering wheels. In the first and second-tier supply chain sector, opportunities include: OEM parts and components, precision assembly devices, machine parts, hybrid vehicle components, suspension systems, and pre-assembly components such as small and progressive stampings. Other products in demand include electronic components, specialized tooling, systems that eliminate waste and green technologies such as new combustion systems to reduce gas emission and oil consumption.

Opportunities

Given the economic slowdown, lack of financing, high interest rates and competition, the market has become more price-sensitive. 70 percent of new cars in Mexico are purchased on credit. Because of the credit shortage, new car sales have decreased and many consumers choose to maintain their vehicles for a longer period of time. As a result, the Mexican government is considering the gradual elimination of ownership tax imposed each year to consumers. In addition, OEMs located in Mexico will continue implementing strategic changes in their brand vehicles, including new technologies to make them more efficient and less expensive.

The number of used vehicles being imported, especially after the NAFTA allowance for newer models, provides opportunities for exports of repair equipment and replacement parts. Effective January 2009, Mexico imposed a 10 percent duty on imports of used vehicles, which was decreased to 3 percent in March 2009. U.S. companies still face some barriers when exporting to Mexico. The most significant requirements include having a Certificate of Origin, and the 3 percent tariff based on a minimum estimated price, or “reference price” for the given year, make, and model of the car. Importers of used vehicles must post a guarantee representing any difference in duties and taxes if the declared customs value is less than the established reference price. U.S. exporters are advised to work closely with their importers and customs brokers to ensure that all specific requirements are met.

Participation in Mexican automotive trade shows provides excellent opportunities to introduce new products and services in Mexico, after appointing a distributor.

Resources

National Auto parts Industry Association: http://www.ina.com.mx

Mexican Association of Automobile Distributors: http://www.amda.org.mx

Mexican Association of Automotive Industries: http://www.amia.com.mx

Office of Transportation and Machinery http://www.trade.gov/auto

For more information on the automotive parts and supplies sector in Mexico, please contact:

Ms. Monica Martinez, Commercial Assistant

Monica.Martinez@trade.gov

U.S. Commercial Service, Mexico City

Tel: (011-52-55) 5140-2628

Fax: (011-52-55) 5566-1111


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