How Innovation, Sustainability Are Driving Auto Sector Growth

Mexico's automotive industry has been growing steadily over the past few years, driven by innovation, productivity, and sustainability. The sector has undergone successful industrial restructuring and has attracted significant foreign investment, making it one of the country's most important economic pillars. 

In this article, we will explore the growth of the automotive sector in Mexico by examining how innovation, productivity, and sustainability have contributed to its success. 

Innovation

One of the key drivers of growth in the Mexican automotive industry is innovation. The sector has seen significant investment in research and development, leading to the creation of high-quality products that are competitive in the global market. In recent years, Mexico has become a hub for automotive innovation, attracting some of the world's leading automakers to establish design and engineering centers in the country.

In 2022, the Mexican automotive industry established 26 private research and development centers with 15,000 engineers, according to the National Auto Parts industry A.C. (INA). The investment in research  has paid off, as Mexican-made vehicles have received recognition for their high quality and innovative features. 

For example, in 2022, the General Motors plant in San Luis Potosi, received the Platinum Plant Quality Award, based solely on defects and malfunctions.

Ford installed its new Global Technology and Business Center (GTBC), with 2,350 Mexican engineers who are developing new Ford products at the 190,000m2 facility, under  the leadership of Marcos Perez O.

The Continental R&D Center in Queretaro, with more than 800 engineers and designers, is developing new technologies, including safety and autonomous mobility systems, and is focused on innovations that enhance safety while saving lives. High-Resolution LIDAR (HFL) and Trailer Reverse Assist are some of the projects led by David Pineda.

ZF is building its first research and development center in Mexico with a focus on mobility and will develop cutting-edge projects for autonomous and electric driving, led by Jorge Vazquez. At this moment, ZF’s website has 16 different open positions posted for research and development and another seven  for information technology specialists.

Productivity

Another factor contributing to the growth of Mexico's automotive industry is productivity. The country has made significant strides in improving its manufacturing processes, resulting in increased efficiency and cost savings for automakers and auto parts manufacturers. Mexico's automotive sector employs over 1 million people in more than 2,000 companies, representing almost 4% of the country's GDP and around 20% of the manufacturing GDP.

The automotive industry in Mexico has more than 90 years of experience, and the Mexican industry has improved its productivity through the implementation of several systems and tools. The lean manufacturing management model aims to minimize losses and maximize added value for the customer. According to Womack and Jones, the five key lean principles are: Value, Value Stream, Flow, Pull and Perfection.

With the implementation of the referred system, the companies have generated significant improvements in key indicators, including OEE, value added PP, PPM’s, delivery program achievement, units per operator hour, stock turns, and turnover per floor area.

The above has allowed the Mexican automotive industry to have an installed capacity of approximately 5 million light vehicles in 2022, making it the fourth-leading country manufacturer of auto parts in the world.

Sustainability

Finally, sustainability has emerged as a key factor driving growth in the Mexican automotive industry. As global concerns about climate change continue to mount, automakers are under increasing pressure to produce vehicles that are environmentally friendly. Mexico has responded by making sustainability a key priority for the sector.

The circular economy is an economic concept that is interrelated with sustainability and whose objective is to extend the value of products, materials, and resources in the economy for as long as possible and minimize waste. 

The circular economy is based on three  principles, driven by design:

• Remove waste and pPollution. The resources on Earth are finite.

• Circulate products and materials as their highest value.

• Regenerate nature and leave more space for nature to thrive.

The Queretaro state government established in the State Development Plan specific goals to reduce emission rates by 8% in 2027. 

Marco Antonio del Prete Tercero, the state’s Minister of Sustainable Development, implemented mechanisms considering the circular economy as one of the main systems. This action not only collaborates directly with the International Development Goals established by the United Nations, but it also supports the automotive industry, with the consolidation of a sustainable ecosystem that works  with the Triple Helix strategy to optimize resources and collaborate with common benefits.

In conclusion, the growth of Mexico's automotive sector has become an example of how to enhance innovation, productivity, and sustainability in production. Mexico is internationally recognized as an important center for the production and innovation of the automotive industry, and this reflects the sector's constant growth in recent years. 

The statistics and projections demonstrate that the automotive sector will continue to be a significant contributor to Mexico's economic and productive development in the future thanks to the great strength that we have through the collaboration and cooperation among companies, universities and the public sector. The country can maintain its position of leadership in the sector by emphasizing environmental and social ethics.