Juan Marotta
Head of Commercial Banking
HSBC Mexico
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View from the Top

Banking on Automotive Industry Growth

Tue, 09/01/2015 - 15:30

Q: How attractive have HSBC’s services been in the Mexican market, and how has the bank been approaching potential automotive clients?

A: Due to HSBC’s global footprint, automotive companies have been contacting our offices in Mexico to request financial advice about the market before making the decision to invest in facilities. Usually, these contacts are established via HSBC’s main offices, but also arise from recommendations from other companies in the industry. We have seen significant interest among German, US, and Asian companies in establishing manufacturing facilities in this privileged location.

In Mexico, HSBC has dedicated auto specialists with a profound understanding of the market’s requirement for financing structures. Additionally, the bank can offer both US dollar and Mexican peso financing at competitive rates for the auto industry, giving us a competitive edge. It is important to work directly with our customers to find the most suitable financing structure, and we are happy to provide custom-made solutions to achieve this. Alongside our understanding and collaboration with the industry, HSBC’s ability to provide financing to Greenfield projects in Mexico, as well as newly established subsidiaries, indicates how unique our dedicated automotive banking services are.

Q: How involved is HSBC in the automotive industry, and how has HSBC helped SMEs develop in this sector, as well as connect them with large suppliers and OEMs?

A: The involvement of HSBC in the automotive industry is significant and is demonstrated by a number of factors. Firstly, the bank has auto specialists as relationship managers in every segment, both at the OEM level as well as the Tier 1 and Tier 2 levels. Secondly, our specific strategic initiatives are dedicated toward the industry in the Mexico-US-Canada corridor. Thirdly, we have the credit appetite and product knowledge required to provide the correct value to the industry participants. And finally, the bank has the global connectivity and footprint required to support companies on a local and international level, covering the aforementioned Mexico-US-Canada corridor, Germany, Japan, India, South Korea, and China. This has been achieved through initiatives that provide financing and customized products and services at affordable prices. HSBC links supply chain members through our own automotive events as well as by participating in independent automotive events. We are also members of the American Chamber of Commerce and the German Chamber of Commerce, and are working closely with the National Auto Parts Industry (INA) to provide insights into the automotive market. HSBC also participates in the Nacional Financiera (NAFINSA) Cadenas Productivas program.

Q: How have your factoring and funding solutions been received among your Mexican clients?

A: During 2015, we have been investing in a new system to provide an enhanced factoring platform to our customers for their receivables finance needs. Additionally, with reference to reverse factoring, commonly known as supplier finance, HSBC has developed an in-house platform that allows for robust invoice management, in real time, and in both US and Mexican currencies for suppliers located anywhere within the Mexico-US-Canada corridor. This truly sets us apart from our competitors. In terms of funding, the market is heavily biased toward the US dollar, while Mexican peso loans represent a small portion of those provided by HSBC to the automotive sector. In recent years, more companies are looking at bank financing as a source of funding for their newly created subsidiaries in Mexico. This is due to low US dollar funding rates rather than only intercompany or equity funding. Most companies are opting for a combination of equity, intercompany loans, and bank funding.

Q: How does import and export factoring help companies with their international operations?

A: Receivables finance solutions are financing alternatives with attractive features for international operations. For instance, in a reverse factoring or supplier finance transaction, the supplier, located in Mexico for exports or abroad for imports, will receive financing in the form of anticipated payments without any requirement to use or establish credit facilities with a bank. Therefore, receivable finance structures in the automotive industry help companies to engage in international operations, even if they do not have traditional access to credit.