Image credits: Ig_JoshABeech
News Article

Production Increases, Investments Diminish in 2020

By Jorge Ramos Zwanziger | Mon, 12/07/2020 - 17:00

November was a good month for production in the Mexican automotive industry, which saw an increase of roughly one percent in comparison to the same month in 2019, according to data from INEGI. This year the industry produced 312,184 vehicles, 4,428 more than during November 2019. Of the 13 car companies, only four of them reported a decrease in production: GM, KIA, Honda and Volkswagen. “Even though the growth rate slowed down, reaching 11.8 percent in October and 1.4 percent in November, production of light vehicles has been above 2019 levels for two consecutive months in 2020,” Julio Santaella, Head of INEGI, told El Economista.

INEGI also reports an increase in exports, with 287,703 cars being exported in November 2020 against 275,845 in November 2019, a 4.7 percent increase. “The recovery in Mexico is based on the recovery of the US and the latter’s return to the purchasing capacity it had before the coronavirus pandemic. Also, brands are giving more incentives which greatly benefit Mexican exports,” Óscar Albín, Executive President of INA, told El Financiero. El Economista argues that new manufacturers in Mexico of both Ford and Mercedes Benz, as well as the demand by the US and Germany, incentivized production and exports in the Mexican automotive industry during November, creating two consecutive months of production. “North America is the main destination for vehicles made in Mexico, 86 percent of which are then sent to the US, followed by Canada. Our vehicles are sent to over a hundred countries, but exports focus on these markets,” commented Fausto Cuevas, Director General of AMIA, to El Financiero.

Albín, expressed concern to El Financiero about the new president of the US, arguing that uncertainty in that country means uncertainty for Mexico. Uncertainty can be troublesome because it can affect foreign direct investments (FDI), as mentioned in this MBN article about uncertainty in the automotive sector. El Financiero reports that the COVID-19 pandemic has caused the largest decrease in FDI in Mexico’s automotive sector in 20 years. Between 1Q20 and 3Q20, FDI has dropped 52 percent in comparison to 2019. “There were large FDI during the administration of Peña Nieto and Calderón, which benefitted us. Now I believe it will be minuscule, even with the opportunities we have, so it is necessary to create a network of internal suppliers,” said Albín.

The data used in this article was sourced from:  
INEGI, El Economista, El Financiero
Photo by:   Ig_JoshABeech, Unsplash
Jorge Ramos Zwanziger Jorge Ramos Zwanziger Junior Journalist and Industry Analyst