VW Presence in the Mexican Market Decreases

Volkswagen’s (VW) participation in the Mexican market decreased amid lack of inventory, which was affected by the sanitary crisis and the Russia-Ukraine war. In Feb. 2022, its sales shrank by 16 percent in comparison to the previous month. In Mexico, from the five brands making up the VW Group, only Porsche grew in light vehicle sales between Jan. 2022 and Feb. 2022, according to the Mexican Association of Automotive Distributors (AMDA).  

During that period, VW Group’s market participation decreased by 2.5 percent in comparison to 2021. But VW remained profitable in Mexico in 2021, said Herbert Diess, President, VW Group. In 2021, the carmaker’s market participation was above Toyota and KIA’s but it has now fallen behind both of them. VW has a market participation of 8.90 percent, while Toyota has 9.6 percent and KIA has 9.1 percent. Nonetheless, VW Vento and Virtus have positioned themselves as two of the most popular subcompacts in Mexico.

About 30 percent of VW’s sales rely on vehicles produced in Mexico, albeit most vehicles produced in the country are exported to the US. During February, production in Puebla’s VW plant and Guanajuato’s Mazda plant presented problems in production. Between January and February, VW produced 54 percent less vehicles than those produced in 2021 during the same period, according to Bloomberg.

In 2021, across the VW Group, vehicle sales shrank by 6.3 percent, said Diess. Although semiconductor supply will increase throughout the year, the Ukraine conflict does not lend itself for an optimistic look at 2022, explained Diess.

Guillermo Rosales, Executive President, AMDA, said that VW has been one the most affected brands due to lack of inventory. The current complex scenario characterized by the COVID-19 outbreak and the Ukraine conflict suggests that the global economic situation may worsen in the coming months, which puts at risk the viability of reversing the lagging demand. Uncertainty and inflationary pressures due to performance of oil prices and other commodities will undoubtedly affect both producers and final consumers, said Rosales to MBN.