The National Auto Parts Industry (INA) expects the increase in the Regional Content Value (RVC) required by USMCA to 75 percent will attract more automotive investment to Mexico. This rate will be enforced in July 2023, forcing automotive manufacturers to invest in the production of auto parts in North America.
Francisco González Díaz, President, INA, highlighted the role that USMCA plays in Mexico’s automotive industry in boosting the country’s nearshoring capabilities. González said that the combination of these factors could attract investments worth US$70 billion to Latin America, with Mexico possibly accounting for over half of this amount, according to El Economista.
“The COVID-19 pandemic has been a critical factor, along with the conflict between Russia and Ukraine, as well as the China-US conflict, and let's not forget that distance is another factor that we do not consider. Bringing products from the other side of the world has an important carbon footprint,” said González. “This is causing geolocation to become more regionalized. Globalization is not dying, it is simply changing its intensity.”
Key North American automakers have requested Alternative Transitional Arrangements (ATR) to manufacture hybrid and EVs due to the scarcity of raw materials. ATRs “Provide additional time and a different transition period to comply with the rules of origin for passenger vehicles and light truck under USMCA, as well as a different transition period to comply with the rules of origin for passenger cars,” explains the Official Journal of the Federation (DOF).
Due to the opportunities created by nearshoring, INA forecasted the auto part market to reach an all-time high of US$109 billion in 2023 and US$110 billion in 2024. “In recent months, over US$10 billion in FDI has been announced, which will be reflected in the first months of next year,” as reported by MBN.
Top Exported Vehicles Manufactured in Mexico During November 2022
GM was the top exporter of vehicles produced in Mexico during November 2022 with 59,041 units, followed by Stellantis and Volkswagen with 36,169 and 20,085 vehicles, respectively, according to Autocosmos.
The Top 5 most exported vehicles were the Chevrolet Equinox, RAM 2500, Toyota Tacoma, Volkswagen Tiguan and the Audi Q5, all of them belong to the SUV and pickup truck segments, with their main destinations being the US, Canada, Argentina and Germany.