Light Vehicles: Results and Trends

Light-vehicle production remains the cornerstone of the Mexican automotive industry. Over the last 10 years, OEMs ramped up vehicle production mostly to supply the North American market. Kia, Toyota, Audi, Mazda, BMW, JAC, Fiat – with the creation of the FCA Group in 2014 – and now Stellantis have arrived with a long line of suppliers behind them. Today, 14 companies report production numbers to INEGI and AMIA.

Overall, both production and exports were impacted by lockdown measures and supply chain disruptions, dropping 20.2 and 21 percent, respectively. "The global pandemic will have significant negative effects. It will be really difficult for the industry to recover lost production and sales levels. The goal now is to get back on track and look forward to regaining pre-pandemic levels," Fausto Cuevas, Director General of AMIA, told MBN in September. Notably, even despite the pandemic, sales of electric and hybrid vehicles continue to gain market share.

Production

Mexico has expanded its production capacity in recent years. The country hit record production in 2017 with 3.93 million units. In 2020, however, the sector produced 3.04 million units, just above levels seen in 2013 when there were fewer OEM plants. The worst hit occured in 2Q20, when most plants were shut down until mid-May. In April, the sector only produced 3,722 units, a historic low. Industry leaders at KPMG, Deloitte and IHS Markit expect a recovery to pre-pandemic levels around 2024 in a normal landscape.

SUVs represent around 42 percent of production, followed by pickups with 25.6 percent and compacts with 23 percent. Production of compact vehicles remains in a downward trend, while pickup production increased mostly due to Toyota's new plant in Guanajuato focused on the Tacoma model.

GM, Nissan, Chrysler and Volkswagen accounted for 72.3 percent of total production in 2020. Notably, Ford dropped from sixth to eighth place in production in 2020, while Mazda jumped from 10th to seventh position. In fact, the latter company presented positive production results in 2020 with a 51.2 percent increase against 2019. Other companies reporting positive growth in production were in the luxury segment. Mercedes-Benz reported 43.9 percent growth, while BMW, which just started production in 2Q19, reported a 125.5 percent increase.

Vehicle production has also been influenced by a shortage in semiconductors, which in 1Q21 paused operations at most OEM plants in the country from days to a week. Mexico's manufacturing rate has decreased while production capacity has in fact increased. "Mexico has a problem of idle capacity. Mexico’s installed production capacity is around 5.5 million units. There is a lack of production capacity for SUVs and pickups. Meanwhile, the economic recession has had a greater impact on the entry-level consumer, who was focused on compact or subcompact models, which still represent much of the installed production capacity," said Guido Vildozo, Main Partner at IHS Markit, to MBN.

Exports

Production in the country is mostly aimed at the foreign market. Exports have represented around 88 percent of total production since 2018. Even in 2Q20, this figure remained the same. North America remains the major export destination, consistently concentrating 92 percent of total light-vehicle exports in 2019 and 2020. Approximately 85 percent of all exports go to the US, while 7 percent go to Canada. In third place comes Germany with 6.4 percent of exports in 2020. This was the only destination that reported positive growth in exports with a 5 percent increase compared to 2019. Similar to production figures, SUVs make up the greatest share of exports with 46 percent. Pickups follow with 26.3 percent and compact vehicles with 20.7 percent in 2020.

Just like with production, Ford dropped from fifth to seventh place, exchanging places with Toyota. GM, Chrysler, Nissan, Volkswagen and Toyota concentrated 70 percent of total exports in 2020. Close to Toyota is KIA, which accounted for 6 percent of total exports. Despite the pandemic, some companies reported positive growth in exports.

BMW, whose production started in 2Q19, reported a 129 percent year-on-year increase in 2020, followed by Mercedes-Benz with a 65.7 percent increase and Mazda with 67.6 percent growth. “We are forecasting that it will take us until 2024 to reach the industry levels of 2019. There is no macroeconomic indicator that suggests otherwise. There are activities like production and exports that are responding much better,” told Miguel Barbeyto, CEO of Mazda Motor de México to MBN.

While the US is the major export destination for most brands, that is not the case for Audi and Mercedes-Benz. The top export destination for two brands is Germany, accounting for 44 and 56 percent of their total exports in 2020. In the case of Audi, this is consistent with 2019. Mercedes-Benz, on the other hand, did have the US as its top export destination in 2019.

Sales Results

Nissan, GM, Volkswagen, Toyota and Kia, Mexico's Top 5 OEMs, represented 62.64 percent of all sales in 2020. Although light-vehicle sales overall plummeted 28 percent, some brands took a worse hit than others. Among the Top 5, Volkswagen took the heaviest blow with a drop of 30.6 percent, followed by GM with 29.1 percent. In the Top 15, SEAT (13th) fell 38.2 percent, BMW (15th) plummeted 36.2 percent and Ford (ninth) tumbled 35.4 percent. Only two brands reported positive results in 2020: Subaru (24th) with a 12.2 percent gain and Volvo (22th) with 4 percent growth.

Electric, Hybrid Vehicles

As OEMs announce ambitious plans toward carbon neutrality, electric and hybrid vehicles will play a fundamental role in sustainable mobility. In Mexico, experts agree more government support is needed to boost sales and grow infrastructure for these vehicles. That being said, numbers show a sustained increase in electric and hybrid models since 2016, when records began.

INEGI reports sales of EVs, plug-in hybrids, and other hybrid models, with the latter enjoying the largest sales share at around 90 percent in 2020 of all these vehicles. That being said, sales of EVs and plug-in hybrids have consistently increased, even during the pandemic. EV sales grew 47.2 percent compared to 2019, while plug-in hybrids rose 35.7 percent.

Green vehicles have increased their market share, going from 0.5 percent of total sales in 2016 to 2.5 percent in 2020. The regions that concentrate the most sales are Mexico City and the State of Mexico with almost half of the total sales, followed by Jalisco, Nuevo Leon, and Puebla.