J. Arturo Zapata
President
Corporación Zapata
/
View from the Top

New Strategies Needed for Sustaining Automotive Growth

Tue, 09/01/2015 - 15:29

Q: How would you summarize the current state of Mexico’s automotive industry, and how can the country continue its momentum in this sector?

A: The automotive industry in Mexico is one of the most competitive in the world. The country is already playing host to all of the world’s leading automotive companies, except for some Chinese companies. Everybody is aware that vehicle prices are extremely competitive. There are also many models of cars that compete here in Mexico, but not in other markets. Additionally, Mexico has become a true automotive manufacturing hub, with companies intending to sell Mexican-made vehicles in various parts of the world. The quality of Mexico’s labor force is secondto-none, and a lot of the auto parts companies that manufacture for OEMs have also settled here, making the decision to expand into Mexico a lot easier.

Q: In terms of the government, businesses, and the community, what should be their respective roles in this time of change?

A: The government should be looking to the future and focusing on addressing problems ahead of time. While the country may have certain advantages today, this may not be the case in 10-15 years, which is something that most citizens are aware of. Companies are driven by their profits, so if there is a new market initiative where companies can serve their customers, and do so achieving an acceptable Return on Investment (ROI), then they will likely invest in it. If new car sales help to replace older vehicles, as has partially happened over the past 15 years, the potential benefits in terms of pollution reduction are massive. Overall, as a business community, we must seriously begin to analyze how we can help bring about positive change. Another key element is the citizens themselves; they, indeed we, must welcome, applaud, and reward initiatives that will lead to a more sustainable lifestyle. Even though the overall automotive industry is excited that the market is finally starting to grow at an accelerated rate, and that we are going to place over 20% more vehicles on the roads than in the previous year, I am not sure that this alone is a sustainable way of doing business. There are several new opportunities available, such as ride sharing, which is a service that will continue to improve. As people begin to recognize the convenience of these services, our response to such challenges should be significant. Perhaps we should begin thinking of ourselves as part of the solution and not part of the problem.

Q: What can be done to get the industry to support a more forward-thinking approach, even while potentially damaging profit in the short term?

A: The government must spearhead this new approach and rally civil society as support. The reality is that all of us, businesses and communities, realize that we must do something about it. For example, some of our work colleagues spend up to two hours driving to and from work every day, which is clearly not sustainable. People cannot embrace their jobs with the same energy and excitement when so much of their time is taken up simply commuting back and forth. All of us in business are truly competing with companies around the world, so if our employees are exhausted, we cannot expect them to contribute actively and creatively enough in order to take our businesses to the next level. Therefore, we must start working together to tackle this challenge. In light of this need for collaboration, we at Corporación Zapata have developed a dynamic with our business partners, which is a distinct evolution of the traditional relationships we previously held. We no longer simply distribute other companies’ products, but we partner with them in order to build the brand and develop long-term and rewarding business partnerships. In that, we differ from most of our colleagues.

Q: In terms of domestic sales, what differentiates Mexico from the rest of the world from a buyer’s culture standpoint?

A: The Mexican market is unique in many ways, but the consumer’s quality expectations in Mexico are exactly the same as those held by consumers in Western Europe and the US. This is unlike any other developing market in the world. In South America, you will see that these expectations are lower and the quality of the cars reflects that. In Asia, the difference is even more dramatic. In Europe and the US, consumers are demanding vehicles that are almost perfect. The good news is that Mexico, partly out of serendipitous circumstances, and also as the traditional export hub to the US and Canadian markets, has managed to evolve in exactly the same way.