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News Article

Mexico Sees Worst February in Light Vehicle Sales Since 2012

By Sofía Garduño | Wed, 03/02/2022 - 17:37

Sales of light vehicles in Mexico dropped to 78,585 units in Feb. 2022, announced the National Institute of Statistics and Geography (INEGI). This represents a 3.9 percent reduction compared to Feb. 2021 and the worst February for light vehicle sales in Mexico since 2012.

 

Although light vehicle sales grew month-to-month by 1.29 percent in Feb. 2022, they are still 25.97 percent below their average for a February. With this contraction, the automotive industry has accumulated 6 months of accumulated falls.

 

The low sales are a result of the disruption of the sector’s supply chain due to the pandemic, among other factors. Semiconductor scarcity also reduced vehicle manufacturing and increased their prices. The chip shortage is expected to lessen significantly in 2022 so businesses could go back to normal by 2023, said Stefan Hartung, CEO, Bosch, as reported by MBN. In addition, the Mexican Association of Automotive Distributors (AMDA) is estimating an annual growth in sales of 0.21 percent.

 

Other factors impacting the commercialization of vehicles include inflation, which increased 8.6 percent in the automotive industry during last year. Also, the cost of raw materials has increased, leading to the highest price in raw materials per vehicle since 2011, as mentioned in a global investigation by Bank of America.

 

Apart from that, the regularization of illegal cars, also known as “chocolate” cars in Mexico, is expected to affect the new and used vehicle market. According to Guillermo Rosales, Executive President, AMDA, said that the decree “will affect the number of vehicles that are granted regularization and thus affect the formal market of used and new vehicles,” as reported by MBN.

 

Due to the light vehicle market’s dependance on both international and national elements, there is no clarity on how it will develop amid the uncertainty of political and economic factors. The Russia-Ukraine war could also directly impact global vehicle production, as the conflict is expected to have significant economic consequences. Russia is an important producer of aluminum and palladium, two metals essential for the manufacturing of vehicle parts. The conflict can affect supply chains and directly impact Mexico’s automotive production. The conflict also increased oil prices, which could affect the industry. “The rise in oil is one of the variables that impacts the industry. Raw material costs could increase by 20 percent if the war between the two countries lasts longer,” said Sarai Lopez, Coordinator of Analysis, JATO.

 

 

The data used in this article was sourced from:  
INEGI, MBN , AMDA
Photo by:   Pixabay, Ralphs_Fotos
Sofía Garduño Sofía Garduño Journalist & Industry Analyst