Auto Production Drop Hits Export Chain

The COVID-19 pandemic and shutdown of several major automotive factories in Mexico has resulted in a sharp decrease in the number of vehicles being exported from the country’s ports and transported along its roads, T21 reported today. According to INEGI, Mexico exported a total of 807,158 new vehicles during 1Q20. This represents a 28 percent drop from the 1.21 million vehicles exported during the same quarter last year.

Mexico’s automotive producers have been badly affected by the pandemic, which is still spreading across the country. As reported by Mexico Business News last week, automotive production has dropped as much as 98 percent. Toyota’s vehicle exports fell from 10,465 in March to 0 in April, as the company shut down completely. General Motors reduced exports by 92.6 percent from the 71,121 vehicles the company exported during March, with all other major auto producers showing a similar export drop off.

However, exports are likely to rise once again should Mexico’s automotive factories open. The recent well-publicized request from US automotive manufacturers that Mexico should reopen its car factories to supply parts to auto producers north of the border has caused a small standoff. A Volkswagen employee recently died following a suspected COVID-19-related illness, according to El Financiero.

The dependency between the two nations and Canada has been increased by the recently formalized USMCA agreement. As El Economista explains, General Motor’s Silverado pickup is assembled in Roanoke, Indiana with 46 percent of its parts coming from Canada and 38 percent of its parts direct from Mexico. This dependency creates a large and expansive logistical supply chain that requires smooth functioning from all sides for automotive production to get started.

Last week, Mexico Business News’ Automotive Analyst Alejandro Enríquez reported that the US Ambassador to Mexico, Christopher Landau, had shared his concerns on the supply chain interconnections within North America and the impact that COVID-19 is having on the companies involved in it. “I am concerned about North American supply chains; it is a very intricated system where so many companies at stake. Not only the big ones like GM or Ford but also little companies that made alarm systems have certain components made in Mexico,” said the ambassador.