Slow Start for Mexico’s Automotive Industry

In January 2021, the automotive sector produced 15 percent fewer vehicles year-on-year, according to data from INEGI, for a total of 278,711. Fausto Cuevas, Deputy Director-General of the Mexican Association of the Automotive Industry (AMIA), told El Financiero that the fall in production was caused by a global shortage of semiconductors, which are necessary for the assembly of vehicles’ computers.

In light of the COVID-19 pandemic, consumers are purchasing more technological products, leading to a shortage of semiconductors during the last few months, as previously reported by MBN. “This not only happening in Mexican factories but also in the US,” said Cuevas. Many automotive companies have reported a decrease in production caused by this semiconductor shortage. Audi announced mid-January that it would reduce production in Mexico by 42.5 percent, Ford by 65.9 percent, Mazda by 31.1 percent and Stellantis by 28.5 percent, reported El Financiero. This decrease in production has also affected exports, which fell by 6.4 percent year-on-year, the largest reduction in 12 years, argues El Financiero.

The COVID-19 pandemic is still changing consumer habits. During January, vehicle sales fell by 22.6 percent year-on-year, for a total of 81,203 units, according to INEGI. Guillermo Rosales, General Manager of the Mexican Association of Automotive Distributors (AMDA), said that 2021 was going to have a rough start due to the red-light status in several states. He had previously stated that the association had projected a sales decrease of around 7.1 percent, reports El Financiero, but the contraction was much larger. The figures for January 2021 represent the largest sale decrease the automotive industry has reported since the 2008 financial crisis, when sales fell by 28.1 percent, reported El Financiero. "The recovery in automotive sales has stalled as there have been around 20 percent year-on-year decreases for five months,” said Julio Santaella, Head of INEGI.