GM, Ford and FCA Adapt to Industry DownturnBy Alejandro Enríquez | Wed, 08/12/2020 - 10:42
GM, Ford and FCA Group share a long-standing and dominant history in Mexico’s automotive sector. But history and experience alone will not guarantee success and the US Big Three are now facing fierce competition from incoming Asian and European players targeting both the US and Mexican markets.
The US big three are among the oldest automotive companies in the world. After enduring economic crises, mergers and corporate restructurings, General Motors Company, Ford Motor Company and Fiat Chrysler Automobiles together have more than 100 years of car manufacturing experience. Ford arrived to Mexico in the mid-1920s, while Chrysler and GM started operations in the country in the mid-1930s. After more than 90 years, these three companies continue to fuel Mexico’s automotive production, with a combined share of 44.6 percent of Mexico’s annual production in 2019.
History, however, is not a guarantee of success. Now, all three companies are facing serious competition in the North American market. OEMs arriving to Mexico over the last decade have done so targeting the needs of the US and Mexican markets. In 2010, there were just seven OEM groups manufacturing in the country. At the end of 2019, there were 12, each with a strategy to strengthen its market share.
Mexico’s Oldest Automotive Partner
Ford is Mexico's oldest automotive manufacturing partner. In 1930, the Ford de la Villa plant was inaugurated with a daily production of 100 vehicles. Today, the company has 8,700 employees in the country, 129 Ford dealerships and 19 Lincoln dealerships, plus an engineering center and five manufacturing complexes in Cuatitlan, Chihuahua, Hermosillo and Irapuato.
In terms of production, Ford was overtaken by Kia in 2018 as Mexico's fifth-largest car manufacturer. In 2019, still in sixth place, the company manufactured 249,605 vehicles, 40,000 less than Kia. Of Ford's exports in 2019, 94.5 percent were aimed at the US market, followed by 4.75 percent directed to China. As for sales, Ford fell back to eighth place with a 4.37 percent market share and 57,563 units sold in 2019, after Japan’s Mazda reached a 4.56 market share and 60,081 units sold. This marks the fifth year of consecutive decline since Ford ranked fourth with a 6.46 market share in 2015.
Whether the company regains its old sales shine will rely on how the Mexican market embraces industry trends, including EVs and connected vehicles. In its Y19 report, the company highlighted a US$11 billion investment in electrification by 2022.
GM started to assemble vehicles in Mexico in the 1930s. With over 80 years of history in the country and after all-encompassing corporate restructuring after the 2008-09 financial crisis, GM regained in 2018 its position as Mexico's top producer and exporting company. With four manufacturing facilities, one regional engineering center and 19,000 employees, the company produces 12 different models in the country. Annual production in 2019 was about 864,143 units, with its three main export markets being the US, with 74.9 percent of exports headed that way, Canada with 7.7 percent and Germany with 5.5 percent.
Contrary to other automotive manufacturers in the country, including Ford and FCA, GM's production has actually increased over the last five years. The Silverado 2500 double cabin and Equinox SUV were the second- and sixth-most produced models in the country in 2019.
In terms of sales, starting in 2018, the percentage of GM units sold and produced in the country decreased from 47.95 percent in 2017 to just 14.72 percent in 2019. The company has 347 dealerships in Mexico representing GMC, Cadillac, Buick and Chevrolet brands, which helped deliver the company second place in sales with 211,987 units sold in 2019 and a 16.09 percent market share.
Looking to the future, autonomous, connected and electric vehicles are right at the center of its strategy. "We have the ambition, the talent and the technology to create a world with zero crashes, zero emissions and zero congestion," says Mary Barra, Chairman and CEO of GM.
An Old Newcomer
Even though FCA Group emerged less than a decade ago, just after FIAT acquired 100 percent of Chrysler in early 2014, Chrysler had previously established operations in the country in 1938 with a production plant built in Toluca in the 1960s. FCA Group now represents 14 brands, including Alfa Romeo, Chrysler, Dodge, Fiat, Jeep, Maserati and RAM. Two years after the merger, Ferrari completed its exit to become an independent company.
In Mexico, the company has five manufacturing facilities, mainly in Coahuila and Toluca. FCA, combining Fiat and Chrysler’s production in the country, is Mexico's third-largest manufacturer with 560,141 units produced in 2019, including Jeep Compass and Crew Cab, which were the third- and seventh-most produced models in the country. In terms of exports, FCA ranks second and the US, Canada and Italy are its main export destinations.
In terms of sales, Chrysler alone holds ninth place in sales with a 4.22 percent market share and 55,673 units sold. Taking Fiat and Alfa Romeo brands into account, its market share increases to 4.82 percent, ranking it in seventh place above Ford and Mazda.