Mexico Outduels Canada in the US Automotive MarketBy Ricardo Guzman | Tue, 03/03/2020 - 17:36
Mexico has rapidly gained a bigger share of the US automotive market, benefiting from the transfer of manufacturing plants from the north to the south of the US territory, according to a Canadian government analysis reported by El Economista.
In 2019, Mexico contributed 36.2 percent of the total imports of cars, auto parts, trucks, buses and special purpose motor vehicles, compared to the 34.3 percent recorded the previous year. Canada’s share fell from 16 to 15.8 percent during that same period.
It was in 2008 the last time that Canada led this indicator, with 23 percent against Mexico's 20.7 percent. Ever since companies based in Mexico haven been gaining ground from its regional partner.
The analysis made by the Canadian government on the impact of the trade treaty between Mexico, the US and Canada (USMCA) highlights that the US manufacturing base has gradually moved to southern states, which has negatively affected Canadian industries by hindering integration with US supply chains.
Traditionally, the American manufacturing base had been located in the northern part of the country, along the Great Lakes area.
Besides the recent crisis faced by the American automotive companies, which led to the financial rescue of Chrysler and General Motors, the automotive sector has been also weakened by the substantial rise in car fuel prices, impacting high consumption vehicles like SUVs and pickups, the most demanded segment among US consumers.
Mexico has increased its automotive production capacity during the last decade, supported by its lower costs, its skilled labor, its commercial treaties and its logistic advantages.
The growing trend in Mexico's production and automotive exports was one of the main arguments by President Donald Trump when he promoted the renegotiation of the North American Free Trade Agreement (NAFTA), which was later renamed USCMA.