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Mexican Auto Industry Continues to Drive Mexico Forward

By José Zozaya - AMIA
Executive President


By José Zozaya | executive president - Wed, 05/31/2023 - 16:00

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The automotive industry in Mexico has existed since 1925, with the arrival of the first automobile assembly plant. Although the Mexican automotive industry continues on the path of recovering its pre-pandemic levels, it is still among the most important economic activities not only nationwide, but globally. 

Mexico has become one of the most competitive countries in the world and is  a key player in economic development, as well as economic recovery. 

Now more than ever it is necessary to measure the relevance of the industry that serves as perhaps the most important pillar of the Mexican economy. Nearshoring as well as the transition toward zero emissions have brought opportunities for the relocation of global supply chains. 

It is no wonder that, according to INEGI, in the period from 2014 to 2021, auto industry GDP  totaled US$322 billion, and in 2022 — despite the effects of the pandemic — it accounted for another US$48 billion, with the industry generating the most income per year in the country, above the financial sector.

The automotive industry, globally, has been undergoing a period of change that will allow us to move toward a more sustainable and efficient future. 

Mexico has become the seventh-leading vehicle manufacturer in the world and No. 1 in Latin America. 

What makes the Mexican automotive industry so special?

Besides Mexico’s competitive advantages and privileged geographic location, the industry’s ongoing commitment to innovation, economic development and social impact have allowed it to gain such traction. 

It is worth noting that the trade balance of the automotive industry in 2022 amounted to &98.67 billion. This represents 1.7 times the balance of remittances, 2.8 times the amount of total Foreign Direct Investment (FDI), and 4.7 times the foreign currency generated in the tourism balance, items considered to be the main foreign currency generators for the country.

With this, we can say that the automotive trade balance is greater even than remittances and the tourism balance together.

The automotive industry is in a period of unprecedented innovation, given the historic transformation toward zero-emission vehicles. It is also facing temporary obstacles, such as the disruption of supply chains, scarcity or more expensive raw materials, the effects derived from geopolitical conflicts, and commitments to address the effects of climate change and generate fewer carbon emissions in our operations, to  mention a few.

Likewise, this sector in Mexico has been a driver of innovation over time, which is exemplified by the arrival of more investments as a result of our being a competitive and attractive country. In fact, during the last five years, US$20 out of every US$100 dollars of FDI has been attracted by the automotive industry.

In this sense, investors are looking for a destination where they can launch their projects, while meeting their global environmental goals. Now, with the transition to electromobility, new technologies and processes are being generated in the country, thus promoting green investments and commitments to more sustainable energies and systems.

In addition to multiple programs and initiatives carried out by various automakers with their interest groups and the communities where they operate, the sector derived from the manufacturing of vehicles is one of the largest sources of employment in the country, with more than 980,000 jobs per year focused on auto parts production and assembly processes, in turn benefiting around 3.5 million people. In addition to the fact that, through the use of inputs from more than 219 economic branches of the country, our industry has an impact on practically 30 million jobs nationwide.

It is not news that Mexico has become a key destination for new investments in the industry, which will allow not only the industry itself but the country to fight against climate change and recover economically. The arrival of such investment is a reflection of just how important the industry is to Mexico. 

Foreign investments, mainly from the US, Japan, Spain, Germany and France, have also allowed Mexico to position itself as a key partner in the automotive industry, one of the most important for the national economy, which is why it must be nurtured and preserved. For example, we are the seventh-leading producer and the fifth exporter of vehicles in the world, as well as the main sector that generates foreign currency for the country.

Since 1951, the Mexican Association of the Automotive Industry (AMIA) has worked to represent the automotive industry and today more than ever, cross-sector dialogue and collaborations with various levels of government are essential for the future of our industry.

From my role as president of the association representing the automotive industry in Mexico, AMIA, we maintain a commitment to continue betting on our country and to continue working for the development of the economy and the well-being of Mexicans.

However, we need to maintain and continue to strengthen a proactive and productive dialogue between the private sector, government, academia and representatives of civil society to generate lines of action that allow us to take advantage of the general context in which we are as a country and on the international stage, and to value what the automotive sector can continue to contribute to this growth at a regional and global level as the motor that drives Mexico.

Photo by:   José Zozaya

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