Mexico’s Growing Role in the Global Automotive Industry

Mexico has become a pivotal force in the global automotive industry, establishing itself as a major manufacturing hub and influencing the industry's trajectory. Fuelled by a skilled workforce, strategic geographical proximity to key markets, and a favorable business environment, the country has attracted substantial investments from major automotive players.  However, there remains scope of improvement to further strengthen the sector. 

Ranked among the world's 15 largest economies by the World Bank, Mexico stands as the second-largest economy in Latin America, a testament to its robust macroeconomic institutions. "Mexico is an attractive destination, drawing significant attention not only for its preferential access to 51 markets but also due to the robust provisions laid out in the USMCA," says Armando Cortés Galicia, Director General, INA. This attractiveness is underscored by the remarkable achievement of securing US$5 billion in foreign direct investment (FDI) specifically for the production of cars and trucks during 1H23. This is not only its highest figure recorded for a similar period, but also stands as the pinnacle for any complete year, as per data from the Ministry of Economy. 

Nearshoring in the automotive industry has spurred greater integration with manufacturing and technology sectors, fostering synergistic relationships, says Lorena Isla, Director Latin America-Mobility, Frost & Sullivan.

Nevertheless, with 113,873 light vehicles sold in the domestic market and  the export of 2.12 million units, there remains a pressing need for public policies to strengthen and fortify the sector. "Within the industry, areas to improve include stringent government policies, inadequate security measures, and unreliable power supply," says Eric Blasco Ruiz, Director Comercial, APYMSA. Despite having the essential infrastructure, companies engaged in nearshoring encounter challenges in navigating government policies to obtain the necessary licenses, thus highlighting the importance of comprehensive and supportive policies to ensure the industry's growth and sustainability, he adds. 

Auto parts production in Mexico is expected to reach a value of US$108 billion in 2023, with projections indicating a potential surpassing of the US$110 billion milestone in 2024. INA foresees a record-high employment figure of 891,000 by the end of 2023. To meet the surge of job openings, the region needs to focus on talent development due to escalating automation, says Miguel Elizalde, President, ANPACT. “In the face of technological advances, investing in the skills and knowledge of our workforce becomes not just a necessity but a strategic imperative for sustained growth and competitiveness,” says Elizalde. 

"The nearshoring opportunity is one of acceleration. The opportunity already existed, but now with this phenomenon the need for labor development is greater,” says Carlos Mortera, Director General, AMT.