News Article

Queretaro Automotive Supplier Conference Highlights

By Alejandro Enríquez | Thu, 10/29/2020 - 17:24

"We are experiencing a virus that has forced us to change paradigms and rethink processes but that has made us more resilient toward change. Queretaro is making an effort to grow amid a challenging and changing environment," said Minister of Sustainable Development, Marco Antonio Del Prete during the opening of the Queretaro Automotive Cluster’s supplier conference, where more than 73 companies were looking for potential suppliers, including ACPS Automotive, Autoliv, Bosal, Bosch, Brose, BRP, DANA, DIEHL, TENNECO, HI-LEX, Hyundai KEFICO, Jetro, Kiekert, Prettl, Rassini, thyssenkrupp and Valeo.

Queretaro, in the Bajio area, is one of the states that concentrates the most auto part suppliers, as well as R&D and engineering operations. The Automotive Supply conference aims to create business opportunities for Tier 2 and Tier 3 suppliers, while increasing the value of Tier 1s and OEMs in the region. "Our task is to strengthen the ecosystem and keep it fertile," told Daniel Hernández, Director General to Mexico Business News earlier this month.

According to Queretaro's government figures, 23 new investment projects for a total of MX$9.5 biillion (US$450 million) from September 2019 to August 2020, have arrived to the state, five of them focused on part manufacturing. "The state is home to 104 Tier 1 suppliers, more than 200 Tier 2 suppliers and the automotive sector represents 34 percent of the state's GDP, 28 percent of the state's exports and 38 percent of the auto parts manufactured in the country," said Del Prete.

Throughout the week, the conference gathered industry leaders and experts addressing the needs of the region. Some of them included Manuel Montoya, President of Automotive Cluster Network, and Guido Vildozo, Main Partner at IHS Markit. The latter highlighted the effect the pandemic has had on Mexico's automotive industry. "The lack of a fiscal aid by the federal government has a lot to do with it. Truly, aid absence will limit recovery, which will start until 2021," said Vildozo.

IHS Markit forecasts a global contraction of between 15 and 20 percent for the global automotive industry, with global sales around 75 million units. The firm points out that 80 million units are needed for the sector to be profitable. As for the Mexican market, sales are set to be between 930,000 and 940,000 units. There was also a common agreement on the role USMCA will play in strengthening local suppliers. "USMCA will not impact the final consumer since RVC increases are low. OEMs should absorb this increase, which will make them look for national suppliers to reduce costs and substitute imports. Companies will look at Mexico for this purpose since it has the offer to supply the industry," said Eric Anderson, Senior Light Vehicle Production Analyst North America at IHS Markit.

Alejandro Enríquez Alejandro Enríquez Journalist and Industry Analyst