Auto Parts: Mexico’s Edge in American Imports

Mexico has a strong presence in the American auto-part sector, after increasing 10 percent its participation in the country’s market in 10 years. USMCA negotiations can strengthen Mexico’s presence even more.

The auto part sector is large in Mexico, with many companies installed and investing in different regions, like the Bajio area. The future of the auto parts industry in Mexico is promising, with many being optimistic about its future. 2021 expects a manufacturing volume that is equal to or higher than 2019’s, which could be worth around US$95.387 billion, reports El Economista. Mexico is the biggest supplier of auto parts and components to the US, representing 38 percent of US imports. Meanwhile, China contributes 9 percent, Japan 8.3 percent, Germany 6.6. percent and South Korea 5.3 percent, reports El Economista.

USMCA plays a key role in the US with 47 percent of its imports coming from Mexico and Canada. The country plans to keep increasing the regional imports that come into the US. “Strategies implemented by companies across the value chain are now oriented towards stronger regional integration. It will not be so easy to have alternative suppliers from countries outside North America. Consequently, all companies established in Mexico must undergo a great effort depending on their previous strategy to face the change in rules of origin so they can export tariff-free in North America,” Fausto Cuevas, CEO of AMIA, told MBN in an interview.

The Bajio region is one of the most promising in the auto-part sector. Renato Villaseñor, President of Queretaro’s Automotive Cluster, told MBN the following in an exclusive interview: “Overall, USCMA is good news but we need to be creative enough to strengthen our expertise to take the most advantage of the new trading environment. All RCV requirements should help us to recover from the backlog generated during the pandemic.”

Many industry experts remain optimistic and 2021 offers positive expectations. There are challenges, but Javier García, Plant Manager at NSK Bearings Manufacturing Mexico, believes Mexico can overcome them. “The downside of USMCA comes with the tariffs set to special steels, but due to our productivity and efficiency levels, we are surpassing that obstacle,” he said. “The new trade deal (USMCA) has benefited us greatly. Considering the tensions between the US and China, the latter is now coming to North America but installing its manufacturing plants in Mexico. The Chinese-Mexican Chamber of Commerce has been very active in this regard.”