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Weekly Roundups

Moderate Growth Expected for 2022: The Week in Automotive

By Miriam Bello | Thu, 12/30/2021 - 16:14

The automotive sector has survived two of its most challenging years it has ever experienced, however, there is optimism for the incoming year despite certain barriers. Read how the sector closes this year in The Week in Automotive!

Mexico’s Second-Hand Vehicle Market Growth in 2021

Online transactional company OLX Autos saw a 19-percent growth in second-hand vehicle sales during 2021 and is preparing to consolidate in 2022. While new vehicle sales increased by 8.6 percent during November 2021, sales only grew in comparison to 2020, a remarkably poor year for dealerships. The second-hand vehicle market grew in Mexico during 2021 and competition in the online transactional segment has grown, with unicorn Kavak still leading the market. Find out more here.

USMCA Disputes

Canada will officially join Mexico in its dispute with the US regarding USMCA rules of origin by calling for an arbitration panel in the first weeks of January expected to arrive at a resolution to the vehicle parts disagreement. Although US President Joe Biden’s US union-made EV tax break has been the main subject of controversy over USMCA disagreements, the dispute over rules of origin has still not been resolved. After USMCA raised the Regional Value Content (RVC) from 62.5 percent to 75 percent, Mexico and Canada argued for vehicles that meet this threshold to qualify for a second requirement to be granted duty-free conditions. Read an in-depth article about this dispute here.

Tech Platforms for Efficient Communication

High-level technology contributes to companies’ operations more efficient and helps to integrate the entire supply chain, says Netcon’s Francisco García. Read his entire interview to learn more about Software and ERP platforms that integrate data from all areas of a company to make processes and communication more efficient.

A Moderate Growth for 2022

In regards to automotive parts sector´s investments, the industry is expected to take precautions, since it will assess how the COVID-19 pandemic develops and how it will affect the industry as a whole, explained Luis Espinosa President of the National Chamber of the Transformation Industry (CANACINTRA). He also explained that companies need to be certain that the Volkswagen and Audi plants, installed in Puebla, have resolved their components shortage problems for 2022 production.

In addition, the Mexican Association of the Automotive Industry (AMIA) pointed out that the sector will close 2021 with a 2.3 percent decrease with volumes similar to those of 2020, but still adding its fourth consecutive year to the decline.

The Sector’s 2021 Highlights, 2022 Trends

2021 was expected to bring recovery to the auto sector. However, production was affected by a global shortage of semiconductor chips and a cold wave hitting Texas, affecting natural gas supply in 1Q21. The semiconductor crisis was initially thought to be over by 2H21 but it ended affecting the entire automotive value chain, bringing the Mexican industry to its lowest points in production, sales and exports of vehicles in a decade.

Here we present the yearly roundup of the automotive sector and its incoming trends for 2022.

Photo by:   Mexico Business
Miriam Bello Miriam Bello Journalist and Industry Analyst