Middle East Conflict Could Impact Mexico’s Auto Industry

The automotive industry in Mexico is closely monitoring the evolving conflict in the Middle East, anticipating potential impacts on vehicle prices. According to data from the National Institute of Statistics and Geography (INEGI), there has been a 4.9% year-on-year increase in light vehicle prices during the first half of October.

Guillermo Rosales, Executive President, Mexican Association of Automotive Distributors (AMDA), emphasizes the impact of the increase in prices in real terms, particularly against the backdrop of a 4.4% general inflation rate during the same period.

Heightened competition, driven by new market players, will contribute to the stabilization of vehicle prices, says Rosales. However, there are potential risks, primarily arising from geopolitical conflicts impacting raw material costs, such as the ongoing Russia-Ukraine conflict and recent tensions in the Middle East, he adds.

"In the last month of the Israel-Hamas conflict, we observed an impact on raw material increases, primarily linked to energy, and variations in maritime route costs," says Rosales. He urged industry stakeholders to remain vigilant as the conflict evolves, expressing a hopeful outlook for avoiding escalation that could adversely affect the automotive sector.

The conflict between Israel and Hamas has introduced new challenges for maritime freight transport, raising concerns about potential disruptions. 

Regarding logistical and production impacts from Russia's invasion of Ukraine, Rosales says  that the industry has successfully managed the situation. "Different supply sources have adjusted to find alternative points of supply," he says .

Odracir Barquera, General Director, Mexican Association of the Automotive Industry (AMIA), says that the terminal industry has not experienced any adverse effects. Barquera affirms that the industry has absorbed the consequences of Russia's invasion of Ukraine, highlighting the resilience of the manufacturing sector.