Image credits: BMW AG
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Analysis

MAR21 - Pandemic Deals Sales a Heavy Blow

By Alejandro Enríquez | Tue, 03/16/2021 - 06:00

Due to the impact of the pandemic, industry leaders agree policies need to be implemented to accelerate the automotive sector’s recovery. "The international experience of how to deal with the COVID-19 pandemic provides us with a public policy table that has revealed favorable health and economic outcomes, from strong fiscal and monetary incentives that enable companies to survive to maintain the highest possible employment levels," said Guillermo Prieto, President of AMDA, to MBN.

Vehicle sales took a hit of 28 percent in light vehicles and 37.8 percent in commercial vehicles in 2020 compared to the previous year. The 949,353 light vehicles sold represent a 41 percent decrease from the peak of 1.6 million units reached in 2016. Today, the country reports similar sales volumes to 2012. As for commercial vehicles, in 2018, 82,269 freight trucks and passenger buses were sold, while in 2020, sales peaked at 50,875 vehicles, a 38.2 percent drop.

 

Table 1. Year-on-Year Sales Variation Per Segment

 

2019

2020

Var

Light Vehicles

1,317,931

949,353

-28.0%

Compact

261,733

210,554

-19.6%

Luxury

47,156

31,249

-33.7%

Sports

7,667

5,674

-26.0%

Minivans

16,952

9,916

-41.5%

Pickups

193,536

155,411

-19.7%

Sub Compact

447,619

284,620

-36.4%

SUV's

343,268

251,929

-26.6%

Commercial Vehicles

         81,788

     50,875

-37.8%

Freight

66177

44343

-33.0%

Passenger

15611

6532

-58.2%

 

In the commercial vehicle segment, the pandemic disrupted federal plating procedures, causing a major impact on the sector, while the sudden halt in tourism and mobility, which largely drives demand in this segment, also took a toll. Miguel Elizalde, Executive President of ANPACT, was among those pointing to the need for programs and policies to help the industry to recover. "Under current economic conditions, helping small businesses will demand the collaboration of all the stakeholders in the industry, to promote policies that benefit and transform the way we move people and goods," Elizalde wrote for MBN.

The Mexican government has destined 0.7 percent of its GDP to respond to the pandemic, which ranks the country 19th among G20 countries. "The level of support is significantly lower than that offered by peers in Latin America and the G20, which may lead to economic scarring," said the IMF in its report, “Mexico Needs a Fiscal Twist: Response to COVID-19 and Beyond.” The Mexican economy was already in a downward slope with a 0.3 percent GDP contraction in 2019. In 2020, the pandemic expanded the contraction to 9 percent.

Light Vehicles: Market Leaders

Nissan, GM, Volkswagen, Toyota and Kia, Mexico's Top 5 OEMs, represented 62.64 percent of the market 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 (9th) tumbled 35.4 percent. Only two brands reported positive results during 2020: Subaru (24th) with a 12.2 percent gain and Volvo (22th) with 4 percent growth.

Table 2. Top 15 Brands’ Sales Results in 2020

Rank

Brand

2019

2020

Var

Market Share 2020

1

Nissan

268,156

194,427

-27.5%

20.48%

2

GM

211,987

150,256

-29.1%

15.83%

3

Volkswagen

143,649

99,750

-30.6%

10.51%

4

Toyota

105,663

76,577

-27.5%

8.07%

5

Kia

95,539

73,620

-22.9%

7.75%

6

Honda

72,987

47,982

-34.3%

5.05%

7

Mazda

60,081

46,117

-23.2%

4.86%

8

Chrysler

55,673

43,678

-21.5%

4.60%

9

Ford Motor

57,563

37,162

-35.4%

3.91%

10

Hyundai

45,607

32,231

-29.3%

3.40%

11

Suzuki

31,211

25,975

-16.8%

2.74%

12

Renault

32,890

25,516

-22.4%

2.69%

13

SEAT

24,314

15,032

-38.2%

1.58%

14

Mercedes-Benz

20,572

14,788

-28.1%

1.56%

15

BMW

17,815

11,367

-36.2%

1.20%

Toyota and Kia appear to be gaining market share. In 2016, Toyota and Kia ranked eighth and fourth in terms of sales. Toyota has grown its market share from 6.53 to 8.07 percent, while KIA quickly escalated from 3.62 to 7.75 last year, surpassing Chrysler, Honda and Ford. On the opposite side, Nissan, Mexico's top seller, has lost almost 4.5 percentage points of market share over the last four years. GM dropped 3.3 points and Volkswagen 2.3 points. Nissan and GM’s volumes still exceed other brands by far but should trends continue, the leaderboard might shift in the next five years.

Table 3: Market Share Leaders

Brand

Sales 2016

Market Share 2016

Sales 2020

Market Share 2020

Nissan

401,055

24.95%

194,427

20.48%

GM

308,624

19.20%

150,256

15.83%

Volkswagen

206,040

12.82%

99,750

10.51%

Toyota

104,955

6.53%

76,577

8.07%

Kia

58,112

3.62%

73,620

7.75%


Other brands that have sustained increases in their market share over the last five years are China’s JAC, Sweden’s Volvo and Japan’s Subaru and Suzuki. JAC, which started selling in 2017, has gone from 0 to 0.18 percent, selling around 4,000-5,000 units a year. Volvo went from 0.10 to 0.26 percent in 2020, reporting positive results over the last three years. Meanwhile, Subaru, has gone from 0.7 percent in 2016 to 0.15 percent in 2020. Suzuki has also showed sustained growth, rising from a 0.95 percent market share in 2016 to 2.75 percent in 2020.

When addressing the challenge of selling new vehicles in times of a pandemic, industry leaders agree recovery will take until 2024. Tailor-made strategies, resiliency, and a strong customer focus need to be implemented to maintain market leadership. "The most challenging thing was to understand what our employees, our distributors, Mazda Corporation and our customers wanted," said Miguel Barbeyto, CEO of Mazda.  According to Jorge Vallejo, CEO of Mitsubishi Motors de México, "Detaching from FCA in Mexico implied the need to build a new dealership network, a new logistics infrastructure, suppliers and other aspects. As we ramp up our operations, we are focusing on stabilization, not only in terms of sales but our relationship with dealerships and brand awareness."

Commercial Vehicles: Market Leaders

Freight and passenger vehicles were influenced by bottlenecks in plating, reduced mobility and inter-city transportation, as well as a boost in e-commerce. Freight trucks represented 87 percent of the total sales in 2020, with the rest being passenger vehicles. Although the sector overall took a 37.8 percent hit, the average sales decline for companies was 50 percent, with Mexican OEM Dina the worst performer, posting a 93.4 percent sales drop. On the other extreme of the chart, Isuzu and Kenworth suffered 26 and 29 percent reductions, respectively.

 

Table 4. Sales Performance By Company

Company

2019

2020

YoYVar

Market share 2020

Freightliner

21,404

14,741

-31.1%

28.97%

Kenworth

19,052

13,492

-29.2%

26.52%

International

14,405

8,433

-41.5%

16.58%

Mercedes-Benz Autobuses

5,792

3,271

-43.5%

6.43%

Hino

5,040

3,223

-36.1%

6.34%

Isuzu

4,333

3,206

-26.0%

6.30%

Volkswagen Camiones y Autobuses

3,789

1,639

-56.7%

3.22%

Volvo Buses

1,872

1,108

-40.8%

2.18%

Scania

1,958

884

-54.9%

1.74%

Volvo Trucks

1,509

510

-66.2%

1.00%

Mack Trucks

545

202

-62.9%

0.40%

Dina

1,538

101

-93.4%

0.20%

Man Truck And Bus México

551

65

-88.2%

0.13%

Total

81,788

50,875

-37.8%

100.00%

Only 13 brands make up the local industry. The Top 3 market leaders, Freightliner, Kenworth and International, account for 72.07 percent of the market. The first two only sell freight vehicles, while International also sells passenger units. Freight truck leaders include Freightliner, Kenworth, International, Hino and Isuzu. Passenger vehicle leaders are Mercedes-Benz Autobuses, International, Volkswagen Camiones y Autobuses, Volvo Buses and the Mexican OEM Dina.

 

Table 5 Market Leaders by Segment

Top 5 Truck Sellers

Sales 2020

Market Share

Freightliner

14,741

33.24%

Kenworth

13,492

30.43%

International

7,400

16.69%

Isuzu

3,150

7.10%

Hino

3,098

6.99%

 

Top 5 Bus Sellers

Sales 2020

Market Share

Mercedes-Benz Autobuses

3,271

50.08%

International

1,108

16.96%

Volkswagen Camiones y Autobuses

1,033

15.81%

Volvo Buses

537

8.22%

Dina

332

5.08%

 

Photo by:   BMW AG
Alejandro Enríquez Alejandro Enríquez Journalist and Industry Analyst