Since the pandemic and the disruption of supply chains due to semiconductor shortages and the economic crisis due to unemployment and company closures, the automotive industry reduced its figures to their lowest levels since the economic crisis of 2008.
An X-ray of the automotive industry
- Main sector generating Foreign Direct Investment in Mexico.
- Main supplier of auto parts to the United States
- Leading exporter of tractor-trailers
- Fourth largest auto parts producer in the world
- Fourth largest producer of cargo vehicles
- Fourth largest exporter of light vehicles
- More than 2,000 auto parts companies in Mexico
- More than 2 million jobs generated by the automotive sector.
- 26 research and development centers in the sector, with more than 15,000 engineers.
Growth in recent years
In the reports published by INEGI of the Administrative Registry of the Light Vehicle Automotive Industry, an advance of 9.93% was recorded with respect to the same month of 2022.
In 2021, the automotive industry in Mexico suffered a 2% drop in vehicle manufacturing with respect to the previous year. Initially, it was stated that, as of September 2022, vehicle sales increased 11.6% with respect to the same month of 2021, by achieving the commercialization of 85,842 units, 8,912 additional units with respect to the same month of 2021.
COVID-19 hit.
The automotive industry is taking care to generate action plans so that its supply chain is not broken again and to avoid similar crises in the future due to the shortage of semiconductors. This shortage had and will have consequences in the short, medium, and long term.
In the short term, automobile manufacturers stopped vehicle production. In the medium term (today) they are facing the challenges of the imbalance between supply and demand. And in the long term, an alternative supply for semiconductor requirements will have to be considered, such as the upcoming investments in Mexico for semiconductor production.
What investments have arrived?
The 5 largest investments in the automotive industry in Nuevo Leon in 2022 were: Ternium (US$2.2 billion), Kia Motors (US$408 million), Klöckner & Co (US$340 million), Forvia (US$147 million) and Cuprum (US$100 million).
What investments are coming?
One of the most awaited investments that will begin this month is the arrival of Tesla’s Giga factory in Nuevo Leon. The investment and opening of said factory have been a stir for Mexicans, since it implies an investment of between 5,000 and 10,000 million dollars, which would surpass the amounts announced for the construction of other assembly sites in the last decade.
On the other hand, we have the German investment in San Luis Potosi, which will open a BMW plant to produce electric cars that will mean an investment of approximately 800 million euros. Currently, BMW produces all-electric vehicles in three plants in Germany and two in China; its fourth plant will be in San Luis Potosi
The Asian brand Jeutor will try to position itself in the Mexican market as of April 2023, entering the country with approximately 30 automotive distributors in different parts of the country. The director plans to make an investment in Mexico by 2024 for the construction of a manufacturing plant for gasoline and electric cars, with Aguascalientes and Guanajuato as options. This investment could exceed US$1 billion.
GM has one of its plants in Ramos Arizpe, Coahuila, and announced that by 2024, this plant will only manufacture electric cars and has already begun to invest in the remodeling required.
The automotive sector is very important for the Mexican economy, especially for foreign trade because it is the most important manufacturing sector in the country, and in turn, attracts a large annual amount of FDI.
