Image credits: Ivana Cajina
/
Analysis

Domestic Sales Still on the Road to Recovery

By Alejandro Enríquez | Thu, 07/29/2021 - 12:43

Mexican light-vehicle sales are on a path to recovery although not yet at pre-pandemic levels. Accumulated sales for the first half of the year accounted for 515,400 units which is 18.1 percent more than 1H20, but still 19.5 percent below 2019 results and 30 percent below the record sales seen in the same period of 2017. "The market is halfway toward recovery and it still has a great deal of potential," said to MBN José Román, CEO and President of Nissan Mexicana and NIBU, Mexico's top seller with 21 percent market share.

During June 2021 87,088 units were sold, which makes this the second most successful month in the year, just behind March with 95,513 units sold. That being said, it is June with the lowest sales in record since 2014 when 84,207 units were sold. June's results are 38.5 percent above June 2020 but 18.44 percent below pre-pandemic levels of 2019.

 

Performance by Segment

SUV performance ramped up during the first half of the year. The segment that over the last three years represented around 26 percent of the total sales in the Jan-Jun period, in 2021 reached a 29.21 percent share with 150,556 units sold, which places it really close to the subcompact segment – the best-performing segment –, which represented 29.8 percent of total sales during the first half of the year with 153,578 units.

For the subcompact segment this represents the third consecutive year in which the segment loses part of its share in total sales for the first half of the year. In 2019, subcompact models represented 34.45 percent of sales, last year 31.82 percent and should the trend continue, the segment will lose its first place in the near future. In contrast, the SUV segment has consistently increased its share for seven years in a row, starting in 2015 when it contributed 19.55 percent of sales for the first half of the year.

SUV sales are evenly distributed among different brands. Volkswagen ranked No. 1 with 11 percent of total sales, followed by GM with 10.32 percent, Honda with 10 percent, Kia with 9.8 percent and Nissan with 8.83 percent. This ranking varied considerably against 1H20, when Honda (11.21 percent), Kia (11.13 percent), Nissan (10.89 percent), Mazda (9.50 percent) and Toyota (8.99 percent), dominated the first five positions. Kia Seltos (7,148 units) remained the best-selling SUV in 1H21, followed closely by Chevrolet Tracker (7,076), Volkswagen Taos (7,027), and Honda CR-V (7,022). These were the only models with reported sales above 7,000 units this year.

Other relevant segments for the market are compact vehicles, in third place, with a 19.85 percent share of sales during 1H21, a two-point reduction against last year. Pickups are fourth representing 16.72 percent of total sales during 1H21 and with stable results compared to 2020. Still, the segment remains in an upward trend that has lasted five years since 2017 when it accounted for 13.28 percent of the half-year sales.

 

Brand Performance

The Top 5 automakers remain unchanged since 2018 when Kia broke into the ranking. Nissan has not let go of its top position with 108,600 units sold and a 21.07 percent market share, one more point against last year. In second place is GM with a 14.60 percent share and 75,235 units sold. Completing the Top 3 is Volkswagen with a 10.13 percent share and 52,185 units. In fourth place is Toyota with a market share of 8.43 percent and 43,469 units and in fifth place Kia with a 7.86 percent share and 40,500 units.

Román highlights the role strategy plays in maintaining leadership. "More than support, it is about strategy. We provided our dealerships with certainty, clarity and a clear direction. We also created crisis committees with distributors, employees and suppliers. Together we are stronger, as our motto says. We did the right thing for our employees and our customers, too, through Credi Nissan. This moment taught us that we owe ourselves to the Mexican market and we want to be here for 60 more years and beyond.”

Market shares remain steady with Kia consistently increasing its share since its formal arrival to the market in 2016 when the company enjoyed a 3.25 percent share. The brands upward trend was only interrupted slightly by the pandemic with a negative 0.01 percent variation in 2020). Interestingly, Toyota hit a record market share for the first half of the year in 2020 with 8.52 percent, while this year it performed at a 8.43 percent share. "Our sales team, Toyota Motor Sales de México, did an outstanding job to adapt to the new normal. We enabled digital sales channels to take leads to our dealership network. These, among other strategies, helped us deliver healthy results and maintain our fourth-place ranking for sales in the Mexican market," said Luis Lozano, President of Toyota Motor de México.

For the first half of the year, the Volkswagen brand continues to present a downward trend since 2014 when it reported 15.11 percent and 75,704 units sold. A five-point reduction was reported in 1H21 against 2014 with 10.13 sales share and 52,185 units sold. Meanwhile, GM’s result continue to fluctuate although it has remained closed to 16 percent since 2017, except for this year when it reported a 14.60 percent share.

Rounding the Top 10 are Mazda, Chrysler, Honda, Hyundai and Ford. Drops in the ranking include Honda which went from sixth place in 1H20 to eight in 2021. Ford also dropped from ninth to 10th place with a 3.67 percent market share in 2021. Hyundai advanced from the 10th to ninth place in 1H21 with a 3.83 percent share and only 2,000 units below pre-pandemic levels. Claudia Márquez, CEO of Hyundai agreed that innovation, digitalization and protecting the brand’s teams was key to assure success. “The team was very happy that we were able to adapt to this new, unprecedented reality. After realizing how things were going, we looked for ways in which we could support communities. We have reduced the time of all processes. We went through the digitalization of all processes but it is something we were able to do well. We wanted to streamline procedures,” said Márquez, during Mexico Automotive Summit.

Chryslers' brands also jumped from the eight to the seventh place with a 4.62 percent share. Mazda jumped from the seventh to the sixth place with a 4.73 share. The President of Mazda de México, Miguel Barbeyto, agrees that the industry is going through a fast-paced shift. "In the last 12 months, consumer trends have changed for the better. The world is experiencing a renaissance that brings great opportunities. Even though there is still a long way to go, we have all rethought personal, health, financial and work goals and, above all, our spiritual needs," said Barbeyto, during México Automotive Summit.

As for the best-selling models, Nissan dominates the Top 10 with Versa (No.1 - 36,017 units), NP300 (No.2 - 29,412 units), March (No.3 - 19,614 units) and Sentra (No. 8 - 10,043 units). In second place there is GM with Chevrolet Aveo (No.4 - 18,154 units), Beat (No. 6 - 13,222 units) and Onix (No.9 - 9,446 units). In third place with two models is Kia with Rio (No. 7 - 12,510 units) and Forte (No. 10 - 7,165 units). Volkswagen only has one model in the top 10 with Vento (No.5 - 13,665 units). Notably, Nissan’s NP300 is only 200 units below 2019 sales results, while Kia Rio has already surpassed 2019 sales results.

Path to Recovery

Despite the difficult market conditions, there were brands that reported consistent three-digit grow in 1H21 against 1H20: Fiat with 121.2 percent and Volvo Cars with 102.5 percent growth, comfortably surpassing 2019 sales levels. It is important to note, however, that there is a statistical rebound when comparing year-on-year figures, according to Daniel Zaga, Economist at Deloitte. Taking that into account, only six brands have reached ful recovery, meaning they equaled or surpassed 1Q19 sales. Subaru ranks first with a 72 percent increase in sales against 1H19, followed by Volvo Cars with 71.9 percent, JAC with 47.9 percent, Peugeot with 21.9 percent, Suzuki with 12.5 percent and Fiat with 11.7 percent.

Of the Top 5 players in the market, Toyota is closer to recovery with only 11.7 percent negative growth in 1H21 compared to 1H19. Kia is second with -14 percent, Nissan is third with -17.3 percent, followed by Volkswagen with -23.5 percent and GM with -24.6 percent. This data is consistent with the brands’ market share performance. Brands that are further from recovery are those in the luxury and premium segments, with Lincoln, Jaguar, Infiniti and Acura reporting more than 50 percent negative growth compared to 1H19 sales.

"The conditions seem to be in place to start the recovery," wrote Guillermo Prieto, President of AMDA, for MBN.

Photo by:   Ivana Cajina
Alejandro Enríquez Alejandro Enríquez Journalist and Industry Analyst