SUCCESSFUL RESULTS, POSITIVE OUTLOOK

Q: As the Peña Nieto administration comes to an end, what message would you give to current and potential investors in the Mexican automotive industry?

A: In recent years, Mexico’s automotive industry has reached record levels for light-vehicle production and exports. Between 2013 and 2017, production achieved growth of 36 percent and exports of 38 percent. In 2017, the automotive industry, including light and heavy-vehicle production as well as auto parts, represented 3.5 percent of the national GDP and 20.2 percent of the manufacturing GDP. Meanwhile, automotive exports amounted to 32.4 percent of total manufacturing exports and 28.9 percent of the total national exports, with an approximate value of US$118.2 billion. This allowed Mexico to become one of the main automotive hubs in the global market in 2017, ranking seventh in terms of production and third in exports.

Our expectations for Mexico’s automotive industry remain positive and our forecasts show that by 2020, light-vehicle production could reach 5 million units per year. Furthermore, we expect the country will maintain a strong performance in auto part and component production. My message for investors would be to remain confident about the Mexican automotive sector. Investing in the national industry will continue yielding positive results but it is imperative that both industry and investors adapt to the complex global environment.

Q: What are the main areas of opportunity that need to be addressed in Mexico to improve the local supply chain?

A: Even though the automotive industry had an exemplary performance during this administration, there are still areas of opportunity to be addressed to increase the country’s competitiveness and strengthen Mexico’s position as one of the main investment destinations, especially with the emerging trends in auto manufacturing.

The latest investments arriving to the country for vehicle assembly, including companies such as BMW, INFINITI, Daimler, Kia and Toyota will increase demand expectations on auto part production. Despite many of the largest auto part companies from North America and Europe having already set up shop in Mexico, there is still an opportunity to attract investment from Tier 1 Asian enterprises. Furthermore, Mexico needs to grow its supplier base at the second and third levels of the value chain, prioritizing providers of raw materials and tooling components. It is necessary to develop the supply chain by type of process, boosting growth of all kinds of suppliers, while promoting quality certifications and specialization among all players. Another strategic move to strengthen and diversify the automotive supply chain would be to reduce the existing gaps between the industry’s human capital requirements and what is offered by technical and professional academic institutions.

Q: What conditions must be met for the automotive industry to remain a pillar in Mexico’s economy?

A: For the industry to remain a pillar of the Mexican economy, global markets must remain open. In addition, the country must strengthen the capabilities of its local industry, including infrastructure development and human capital availability based on the profiles the industry demands. In order to do so, appropriate human capital development must be a priority, especially to adjust their skills to meet Industry 4.0 productive trends. At the same time, innovation is essential to escalate the industry toward higher value-added activities.

Q: How far along is Mexico in its journey toward being an advanced manufacturing and engineering destination?

A: R&D centers in Mexico are now specialized in research and testing projects with global reach, virtual design, project management, prototyping and emission analyses, as well as design and engineering of automotive components, systems and subsystems. Promotion of these types of activities will lead Mexico to a more relevant position as an automotive design and production hub capable of catering to the latest technological developments and adhering to the strictest environmental regulations.