Mexico Auto Sector November PerformanceBy Alejandro Enríquez | Mon, 12/07/2020 - 17:08
Auto sector performance in November confirms Mexican production and exports are on the path of recovery. Figures show a two-month sustained year on year increase in production and exports. Sales on the other hand remain in red numbers as they have suffered year on year two-digit decrease every month since the pandemic hit Mexico in March.
"There will be ups and downs as we go through this recovery process. It is really important to highlight that our analysis is based on health concerns. We assume that there will not be a major distribution of the COVID-19 vaccine until 2H21 in the Northern Hemisphere. This means that significant inoculation will not happen until 2022," said to MBN Guido Vildozo, Main partner at IHS Markit.
During November automotive production in Mexico experienced a 3.96 percent increase compared to November 2019. This adds up to the positive YoY 11.81 percent variation seen in October. Positive variation in production numbers could obey to different elements.
The fact that Mexican production is strongly linked to US demand is part of this positive trend. 81.12 percent of Mexican light vehicle exports in November were aimed at the US. Canada and Germany followed with 6.72 percent and 5.45 percent respectively. The rest of the countries accounted only for 6.41 of exports.
As production stopped for two months in North America vehicle stocks in the US remained limited and there is pressure to restock. "stocks in the US are at very low levels with an almost 700,000-unit inventory shortfall," said Vildozo. Manuel Montoya, President of CLAUT, also agrees: “Production was largely normalized by the industry's drive in the US. We also posted good results in October and we expect to close 2020 with results similar to 2019,” he told MBN.
Regarding sales, no recovery trend is visible yet. Year on year sales have decreased at a double-digit rate since March. Despite October saw a lesser reduction of 21.28 percent, November’s figures show an increase of 2.2 points to reach a negative 23.48 percent variation, despite a monthly increase of 13.3 percent against October. Experts agree sales in Mexico will not surpass a million units by the end of the year.