Mexican Automotive Production and Exports Drop in Puebla

The consequences of COVID-19 are already being felt in the Mexican automotive industry. According to INEGI, in 1Q21, Puebla recorded a 16.7 percent contraction in car production and a 12 percent drop in exports compared to the same period last year. In January and February 2021, Audi and Volkswagen, the Puebla-based carmakers, produced 77,966 units compared to 93,682 units in the same period in 2020. “The COVID-19 lock-in has produced a global over-demand for semiconductors by technology industries, so auto parts and vehicle manufacturers suffered shortages, causing an impact on the automotive sector,” said Óscar Albín, President of INA, according to La Jornada.

Last January, Audi announced a reduction in production at its plant in San Jose Chiapa, Puebla, as a result of a shortage of supplies needed to develop the vehicle's electrical system. The plant reported production of 17,027 vehicles during the first two months of 2021, down 33.3 percent against the same period in 2020. Volkswagen produced 60,939 units during the first two months of the year, a decrease of 10.6 percent, according to data from El Milenio.

In terms of exports, 65,881 units left Puebla for international markets between January and February. Fausto Cuevas, Director General of AMIA, told Forbes that "the shortage of semiconductors will affect production during the first half of 2021."

In addition to the challenges brought by COVID-19, the industry also faced outages due to the cold snap that hit southern US. According to INEGI, vehicle assembly and production in Mexico fell by 20 percent in 2020, although there are reasons for optimism. According to the BBC, the semiconductor industry will start to recover in 2Q21.

Major semiconductor manufacturers are located in Taiwan, Korea, China and Japan, and during the pandemic they refocused their production on technology industries. Infineon, Europe's largest semiconductor company, warned that automotive companies need a different model for procuring critical chips.