Latin America Reports

Mexico's automotive industry ramps up exports

By Charles W. Thurston | March 7, 2008

With positive GDP growth forecast for the year, Mexico will continue to boost its automotive exports.

Exports by Mexico's automotive industry to North America were up a surprising 25% in January, compared with the prior-year month, boding well for suppliers of automotive paint and coatings. Total Mexican automotive exports to North America amounted to 92,000 units in January, while exports from Mexico to Europe amounted to 17,000 units-an increase of almost 83% in the month-to-month comparison, according to data from Asociacion Mexicana de la Industria Automotriz (AIMA) in Mexico City. During full-year 2007, Mexico's automotive exports grew five percent on production growth of 2.2%, while domestic sales fell 3.5%.

"Mexico's automotive production has grown robustly-approximately ten percent per year over the past three years-to two million vehicles, and looking forward, we expect the volume to continue to grow by approximately five percent per year to 2.8 million vehicles in 2014," said David A. Fischer, the global market manager for DuPont OEM automotive finishes, Troy, MI. "We are pleased that Mexico is growing and that we are in a good position to take advantage of that growth."

DuPont has both a production facility and a research/applications laboratory in Mexico, serving the domestic and export markets. Last year, DuPont gained new business in Mexico from Volkswagen at its plant in Puebla, the capital of Puebla state.

While Volkswagen and Toyota both have added production capacity in Mexico over the past year, other majors also are boosting Mexico investments. GM is expected to start production next year at a $600 million plant in San Luis Potosi, the capital of the state of San Luis Potosi. Additionally, a new entrant to the market will be China's First Automobile Works Group, which in November indicated it would build a plant in Zinapecuaro, in Michoacan state, through a joint venture with the Salinas Group, with plans to start production in 2010.

Similarly, an expanding player in Mexico's automotive supplier market is DESC-CIE Automotive, which is expected soon to open a $52 million factory in Saltillo, in Coahuila state, which will paint and line pickup beds for Chrysler. The joint venture, which was established in 2005, is being funded by Spain's CIE Automotive, which has plans to invest $200 million in Mexico over the next five years, targeting the NAFTA automotive market. DESC-CIE also supplies Ford, GM and Volkswagen.

Despite its close economic linkage to the U.S. economy, Mexico is growing a bit faster than the U.S. Mexico's gross domestic product increased by 3.7% during third-quarter 2007, but the full-year estimate for 2007 growth was recently cut to 2.9%. U.S. GDP growth last year was 2.2%. The forecast for Mexico's GDP expansion this year is as high as 3.25%, according to the Mexican government.

Nevertheless, Mexico's GDP per capita is now in the $12,500 range, which suggests more Mexican families can purchase automobiles, auto parts and paint. Recent legislation in Mexico will also facilitate the purchase of vehicles from the U.S.