Nearshoring Brought US$2 billion in October

Mexico received at least 20 new investment projects in October 2022, according to Credit Suisse’s Mexico Nearshoring Tracker Second Edition. The report points to the automotive sector as the largest attractor of Foreign Direct Investment (FDI), followed by the heating, ventilation, air conditioning, machinery, furniture, consumer, plastics, electronics and textile industries. 

The report found that Volkswagen, Flex Americas, Continental, Bosch and Molex contributed the most to the US$2.05 billion linked to nearshoring activities during this period. The country has received a total of US$17.2 billion in FDI during the first 10 months of 2022, a 25 percent increase over last year. 

During October, several automotive OEMs strengthened their investment in Mexico. For example, Volkswagen announced a US$763.5 million investment in its assembly plant in Puebla, Continental reported a US$209 million investment in Guanajuato and Mazda invested US$60 million to assemble its CX-3 vehicle in Mexico.

Mexico’s exports during 3Q22 have already surpassed pre-COVID-19 levels, increasing by 11.4 percent when compared to last year and 4.1 percent growth versus the same period in 2019. 

Nearshoring continues to be a critical asset for companies willing to invest in the country. Mexico’s privileged geographical position allows businesses to have their assembly plants closer to the US and Canada, one of the biggest market regions in the world. While the three countries are currently engaged in a discussion pertaining the USMCA’s Rules of Origin, local experts have forecasted positive results. Members of the Auto Drive America trade group also highlighted the importance of the US government to relax the country’s position on the rules of origin to “fulfill its potential to create jobs and transition to new and greener technologies,” as reported by MBN. 

Alberto Bustamante, Director, National Auto Parts Industry (INA), said that the panel will likely rule in favor of the Mexican and Canadian posture, which argues that if an auto part complies with the minimum required Regional Value Content (RVC), it can be considered to have a 100 percent of RVC. “We are sure that Mexico and Canada will win this dispute, since the Roll up facility granted by the USMCA rules of origin is written in black and white in the texts of the treaty itself,” said Bustamante.