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News Article

Automotive Industry Faces Challenges Beyond COVID-19

By Jorge Ramos Zwanziger | Thu, 12/03/2020 - 17:10

 The COVID-19 pandemic has raised concerns for all industries in Mexico. The automotive industry, a really important sector for Mexico’s GDP, is concerned about the spread of the disease among its employees, which could also impact its output. But COVID-19 is not the only matter the industry has to address, José Zozaya, Executive President of AMIA, told Expansión.

One of the biggest concerns Zozaya mentions is the logistical challenges the industry has because of security problems, which affect distribution and investment. According to Expansión, Mexico exports 80 percent of the vehicles it produces and 60 percent of them are then moved to Veracruz through railways. The problem is that this railway transportation faces security challenges because of vandalism and robberies that cost the industry millions, reports MBN. “We have to increase security in our country to avoid robberies and vandalism,” he continued in Milenio. This is a problem that has affected investment in the automotive industry. The solution Mexico needs, Zozaya argues, is a stronger rule of law. “Rule of law, to me, is key. There is no order if there is no infrastructure. Investors come and look for security, particularly in a sanitary, economic and financial crisis. It is when Mexico should demonstrate that it is a country with a rule of law, that guarantees security and has the infrastructure, which are fundamental to attract investments,” Zozaya told El Economista.

But vandalism and robberies are not the only problems affecting these railways. Zozaya also highlights that train blockings are a huge problem for the industry because they have created huge bottlenecks for product transportation. “This is critical this season, which is the one with the most sales, because what is being blocked is the efficient delivery of new vehicles both at a local level and the export market,” he continued. This also greatly affects the industry in terms of product safety. “When you cannot move the trains is when they are the most vulnerable to vandalism.” When railroads close for five months or tollbooths are taken over, the country’s investment potential suffers, he explained in El Economista.

Rail insecurity, however, seems to be winding down according to official figures. MBN published an article addressing vandalism in train cargo. According to the Rail Transport Regulating Agency (ARTF), train robberies went down 47.28 percent in 3Q20, in comparison to 3Q19. Vandalism also has seen a decrease of 23.03 percent, when compared to the same period in 2019. This offers more reliability for both users and investors in Mexico, addressing Zozaya’s concerns. Rail security and operational efficiency are still issues that need the cooperation of all regional authorities, something ARTF Leader, Alejandro Álvarez Reyes, mentioned in the SCT release.

The data used in this article was sourced from:  
MBN, Expansion, El Economista, SCT
Photo by:   MichaelGaida, Pixabay
Jorge Ramos Zwanziger Jorge Ramos Zwanziger Junior Journalist and Industry Analyst