The Week in Automotive: More Used Vehicles on the StreetsBy Gabriela Mastache | Fri, 11/15/2019 - 09:59
The automotive industry still registers sales, though mostly of used vehicles. Despite the country’s grim economic outlook, Mexico remains attractive for automotive investment and Mitsubishi’s US$40 million investment is proof of that.
In case you missed it, this is what made the headlines in the automotive industry over the week. Buckle up!
- Consumers are betting on used cars rather than new vehicles. Between January and September 2019, loans for used vehicles increased 12.1 percent compared to the same period in 2018. Meanwhile, credit for new vehicles fell 10.4 percent. According to AMDA, the increase in loans for used vehicles is the result of the uncertainty perceived by consumers and their lack of willingness to spend a larger amount of money in durable goods.
- While global economic volatility has impacted investment in all industries, Mexico remains an attractive destination for automotive investment in light of the soon-to-be ratified USMCA. According to EY, Mexico will benefit from the arrival of new investments, not so much of OEMs but of suppliers given the trade war between the US and China. For 2020, vehicle sales are expected to be “not negative but rather flat,” says Randall Miller, Global Manufacturing Leader at EY. Moreover, global automotive sales could range between 92 and 93 million in 2020.
- Mitsubishi Electric Automotive will invest US$40 million in its manufacturing site in Queretaro. The project includes the construction of a new auto parts production center for components such as EPS, central information displays and led control units. The project will generate 350 high-specialization jobs in the region.
- Diego Sinhue, Governor of Guanajuato, says that boosting the automotive industry demands regionalization. According to him, joint work between Jalisco, San Luis Potosi, Aguascalientes, Queretaro and Guanajuato has led to a 4 percent growth in the region in the past five years.
- Should the US impose a 25 percent tariff to imported vehicles and components from Mexico, Canada and the UE, the average price of a car in the US would elevate by US$3,000, while imported vehicle prices would increase by US$5,800.