José Zozaya
President
AMIA
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Sustainability Remains a Priority as Automotive Sector Recovers

By Alejandro Enríquez | Mon, 10/04/2021 - 09:00

Q: What are the main challenges Mexico’s automotive industry faces?

A: Mexico’s economic recovery faces significant challenges. Specialists surveyed by the Central Bank of Mexico (Banxico) in July 2021 forecast 6.06 percent GDP growth in 2021 and 2.83 percent in 2022, while inflation is expected to reach 5.94 percent in 2021 and 3.70 percent in 2022. Hand-in hand with the limited expectations, other analysts point out that during the next six months, economic growth will be hindered by public insecurity and domestic political uncertainty and market weakness.

One of the most relevant difficulties we faced in recent months is the shortage of semiconductors caused by increased demand for the manufacturing of electronic devices, such as video game consoles, cellphones and computers. However, semiconductors are also a key part for the production of cars because they are used in vehicle control systems, speedometers, proximity sensors, tire sensors, alarm detectors, seat belts, cameras, fuel injection and infotainment systems, among others.

Q: How are OEMs in the country performing on the road to recovery? 

A: OEMs have done as well as possible under present circumstances. Despite the issues, OEMs have worked hard to stay up to date with market expectations and challenges. At the beginning of the year, we expected an increase in production and exports of 12 percent compared to 2020. But the results of July and August have forced us to reexamine our forecasts. We expect to have figures similar to last year because of the scarcity of semiconductors. 

Q: Production figures remain constrained by supply shortages. How are OEMs coping with this situation? 

A: Each corporation has a different global strategy but none will be a short-term easy solution. We expect that the sector will recover by mid-2022. But investments to increase the production capacity of semiconductors will take at least two to three years to bear fruit.   

Q: How is AMIA supporting the interests of the sector under USMCA?

A: AMIA’s members continue to adapt to the operating rules set out in the USMCA. The main challenge is that rules of origin require a change in focus and in the sourcing strategy of the parts and components that make up a vehicle. However, this challenge is also one of the most important opportunities for the relocation of suppliers into Mexico.

Q: How has the industry’s sustainability approach impacted the sector in Mexico?

A: The industry is fully committed to sustainability to ensure a healthy environment for future generations. One priority is electromobility, as most automakers have committed to meeting the Sustainable Development Goals of the 2030 Agenda by ceasing to manufacture gas-powered vehicles by 2040.

US President Joe Biden signed an executive order that establishes that by 2030, 50 percent of the vehicles sold in that country will be electric or release zero emissions. For that reason, it will be essential for Mexico and Canada to advance and promote the political will for the preservation of the environment. We cannot avoid our responsibility to adapt models within the automotive industry to meet consumers’ sustainability demands.

Q: What are the challenges and opportunities to consolidate connected, autonomous, shared and electric mobility in the country?

A: Mexico has great potential to produce electric vehicles, as can be seen in our report on the sale of hybrid and electric vehicles. In June 2021, brands sold 4,344 hybrid and electric vehicles, 157.7 percent more than the sales registered in June 2020 (1,686 units). During 1H21, brands sold 23,143 electric and hybrid vehicles, which represented 4.4 percent of total light-vehicle sales. 

We still have a long way to go in the transition to electromobility but AMIA has taken the first steps to promote and strengthen the use of hybrid and electric vehicles in Mexico. These vehicles are now manufactured in Mexico and OEMs continuously announce new investments in the production of these vehicles.

We are communicating with the authorities and members of the industry to tackle the accelerated changes caused by global trends, such as the use of technology in sustainable transport alternatives to face the greatest environmental challenges. However, to achieve this, the sector needs a comprehensive vision to respond to the challenges derived from electromobility, such as the need to update the legal framework and new mobility and charging infrastructure, among other features.

 

The Mexican Association for the Automotive Industry (AMIA) is a civil association created in 1951 that represents the interests of vehicle manufacturers established in the country.

Alejandro Enríquez Alejandro Enríquez Journalist and Industry Analyst