Mexico’s automotive sector faced a challenging year after its much hoped for recovery was cut short due to the ongoing global semiconductor shortage, among other emerging challenges. But even with several unprecedented world crises, the industry was able to close 2021 with a rise of 6.8 percent in auto sales compared to 2020.
INEGI reported a total of 1.01 million vehicles being sold in the country throughout 2021. This increase comes after several months of the industry facing its worst sales numbers in years, as the shortage of semiconductors and auto parts halted and slowed down production in plants across the country. October saw the worst sales numbers in a decade with a decrease by an annual rate of 9.1 percent compared to sales in Oct. 2020.
Although 2021 started on track to make up for the losses experienced in 2020, as the pandemic stopped mobility and lowered the demand for automobiles worldwide, many were not sure if the year’s holiday season would be enough to make up for the slump in sales that began in Aug. 2021.
INEGI’s numbers show that the industry was able to achieve sales goals but could not make up for the major losses incurred in 2020, when sales saw a nine-year-low with a drop of 27.9 percent. Last year saw an increase in sales but they remain far from reaching the 1.3 million sales seen in 2019 and 2016’s record 1.6 million.
In fact, these numbers might be out of reach for the industry until the late quarters of 2023 or even 2024, according to Fausto Cuevas, General Director, Mexican Automotive Industry Association (AMIA). This is due to the fact that the semiconductor shortage does not have a definitive end in sight. In fact, it might even be delayed as the global transition to 5G networks creates a higher demand for tablets, cellular phones, video game consoles and other products semiconductor providers prioritize over distribution to auto-parts makers.
Additional challenges which lay ahead in 2022 for the automotive industry and its recovery plans include further developments in the USMCA disputes regarding US electronic vehicle tax credits and rules of origin. The disagreements between member countries will have to be solved by a panel made up of members of all three countries, particularly as Canada joined Mexico in being more aggressive in its disagreements with the US.
The development of the constitutional energy reform, which industry experts see as a threat to foreign investment in Mexican production including the automotive sector, and the emergence of COVID-19 variants will also become important factors for automotive sales in 2022. But as 2021 is proof, no one is sure of what challenges and opportunities the year will bring.