Auto Production Falls in December

Mexico’s automotive production and exports continued to decrease in Dec. 2021, as the month fell short in comparison to 2020’s numbers and remains far away from 2019’s, data from the National Institute of Statistics and Geography (INEGI) shows.

INEGI’s data shows that auto sales saw an increase in Dec. 2021 from the previous month for the second time in a row, helping 2021’s sales go up. December’s auto sales amounted to 97,365 after November saw the sale of 82,829 vehicles and October of 76,640. Prior to this, sales had been steadily decreasing since May as the semiconductor shortage heavily affected auto manufacturers.

December had the most sales of the entire year, barely beating out March’s 96,319 sales. This rise in sales was largely expected as holiday seasons always bring a boost for the automotive sector, evening out slumps seen throughout the year. December’s sales helped the industry close 2021 with a 6.8 percent increase in vehicle sales over 2020’s. But the industry is far from a recovery from the pandemic and the semiconductor shortage, which are joined by USMCA disagreements and the “chocolate” car presidential decree.

While sales numbers were amongst the most positive of 2021, they still represent a decrease from December of the previous year. Sales in Dec. 2020 were 16.51 percent below Dec. 2021’s. Vehicle production similarly fell from 254,251 to 212,272 during those months.

Auto exports also declined during the past year as Dec. 2020 saw the export of 275,081 vehicles while 2021 only exported 227,465. Experts are unsure whether exports will recover soon or further decline due to the disagreements of auto part origin requirements as per USMCA.

Yesterday, the Mexican government officially requested a dispute resolution panel to determine the outcome of the trade dispute with the US following President Biden’s proposed EV tax credit, with Canada joining in support of Mexico. Tensions remain high between the three countries. The US has also voiced concern regarding President Andrés Manuel López Obrador’s proposed constitutional energetic reform. All of these factors could severely impact the export of auto vehicles to Mexico’s biggest trade partner.