After the automotive industry finished 2021 with a 6.8 percent growth instead of the forecasted 24 percent growth, industry experts are cautious in their recovery expectations, pointing instead to the challenges the industry will have to face.
The Mexican Automotive Industry Association (AMIA) one year ago estimated the industry would grow between 12-24 percent in the production and export of light vehicles and the manufacture of auto parts during 2021. But because of various unexpected hurdles which arrived even as the COVID-19 pandemic seemed to dwindle, the industry was barely able to top its 2020 results.
Guillermo Rosales, President, Mexican Automotive Distribution Association (AMDA), and Erik Ramírez, President and Director, Urban Science Agency Latin American, reported that the industry’s expected recovery will arrive in 2023, at the earliest, due to continuing challenges.
“We hoped that during 2022 we would have growth in components, not only in semiconductors. After the COVID-19 pandemic, many supply chains were affected and they are being reevaluated and rearmed and we are bringing in backups from the other side of the world,” said Ramírez.
Rosales emphasized the semiconductor shortage as an upcoming challenge stopping production and preventing customers from accessing vehicles. The average two-week wait to access a purchased new vehicle has been extended from eight to 12 weeks. The semiconductor shortage is not the only auto part crisis the industry will continue to face. A tire shortage resulting from a decrease in raw material is expected to continue impacting the industry and could even cause another production shortage across Mexican plants.
“The analyst reports indicate that the industry will continue facing a series of restrictions in the first half of 2022 and that in 2023, we can aspire to find a return to normality,” said Rosales.
The forecasted sale of 1.15 million units has now been adjusted to 1.06 million, added Rosales. He forecasts that the year will bring a period of instability and a lack of materials. Numbers show historic gaps in inventory in North America, causing manufacturers to adjust and move production to limit the impact of the situation.
A hope for the industry is that an increasing number of international players are looking to produce semiconductors to meet the rising demand not only for automotive parts but from all sorts of technological production. But even with production breakthroughs, experts are wary of predicting when the shortage will end.