Mexico - E. Automotive Parts and Supplies Mexico - Automotive Parts
OverviewThe Mexican automotive industry is split between the passenger vehicle sector and heavy vehicles for construction and agriculture. Mexico is the seventh-largest passenger vehicle manufacturer in the world, producing nearly four million cars annually. It is also the fifth-largest auto parts producer worldwide with USD 92 billion in revenues annually and the second-largest export market for U.S. auto parts. Mexico is the fifth-largest manufacturer and exporter for heavy and specialized vehicles and parts in the construction and agriculture industries. This overview focuses on passenger vehicles, and we cover heavy vehicles among the sub-sector descriptions below.
The size of Mexico’s passenger vehicle market and our shared border provide an excellent market for U.S. original equipment (OE) and aftermarket parts. In addition, recent investments by established automakers and new Original Equipment Manufacturers (OEMs) have increased business opportunities throughout the country and have attracted Tier 1 and Tier 2 supplier bases. Vehicle production levels are forecasted to reach five million units by 2020, given the new players and expanding manufacturing capabilities.
Mexico Passenger Vehicle Sales in Mexico
(Figures in thousands of vehicles)
|Total Local Production||3,465||3,932||3,908||4,896|
|Imports from the U.S.||174.8||159.3||140.6||140.0|
|Imports Used Vehicles||147.8||123.6||141.7||150.6|
|Total Market Size*||1,584||1,736||1,388||1,999|
Source: Mexican Automotive Industry Association (AMIA) & United States Department of Commerce, Bureau of the Census, Foreign Trade Division.
Vehicle Market in Mexico
(Figures in USD Billions)
|Total Local Production*||35.0||33.0||41.1||49.0|
New Passenger Vehicle & Light Trucks
|Imports from the U.S.||3.6||3.4||3.2||3.0|
Medium & Heavy-Duty Trucks
|Imports from the U.S.||0.4||0.3||0.4||0.4|
|Total Market Size***||N/A||N/A||N/A||N/A|
**The pronounced jump in exports from 2016 to 2018 coincides with the NAFTA renegotiation. OEMs decided to export more to maximize revenues in anticipation of new duties or a change in rules of origin for automobiles.
***Total Market Size cannot be calculated due to the lack of comparable Local Production figures.
Sources: Country economy, Mexican Automotive Industry Association & U.S. Department of Commerce, Bureau of the Census, Foreign Trade Division.
The Mexican Automotive Industry Association estimates that Mexico will become the fifth-largest worldwide vehicle producer by 2021 due to new OEM players. In 2018 Mexico ranked as the sixth-largest vehicle producer with nearly four million units. Established automakers include Audi, Baic Group, FCA Group, Ford, General Motors, Honda, Kia, Mazda, Nissan, Toyota and Volkswagen. Mercedes Benz’s production is in partnership with Nissan–Daimler. Hyundai produces through its Kia partner and BMW will open their first plant in San Luis Potosi in 2019. Toyota will open its second plant in Mexico in Apaseo el Alto, Guanajuato. Baic Group has expressed interest in producing electric vehicles in Mexico by 2020. Together, these companies produce more than 40 brands and 500 models. Around 88 percent of the vehicle production in Mexico is devoted to exports, with the remaining 12 percent destined for the domestic market.
Auto sales decreased by seven percent with 1.4 million units in 2018 compared to 1.5 million units in 2017. Additionally, sales of electric and especially hybrid vehicle are increasing and expected to continue to grow due to the clean energy requirements mandated by Mexico’s Energy Reform. Among domestic vehicle sales, Nissan is the top seller, followed by General Motors, Volkswagen, Toyota, Kia, FCA Group, Honda, Ford, and others. These brands represent 81 percent of the market in terms of sales.
Mexico Auto Parts Market for OEM and Aftermarket
(Figures in USD billions)
|Total Local Production||85.0||92.0||94.0||98.0|
|Imports from the U.S.||28.3||29.7||26.7||28.0|
|Total Market Size*||62.8||67.6||68.8||70.8|
Source: National Auto Parts Industry Association (INA) & United States Department of Commerce, Bureau of the Census, Foreign Trade Division.
Leading Sub-Sectors and OpportunitiesOnce the United States-Mexico-Canada Agreement (USMCA) is approved by all three countries, we anticipate increases in U.S. and Mexican exports in this sector. USMCA changes rules of origin for autos, requiring that 75 percent of auto content be produced in North America and that key core auto parts always originate from the United States, Canada, or Mexico. This means that—after a phase-in period—only goods with this content will receive duty-free access. For additional information on the USMCA automotive manufacturing provisions, please visit the Office of United States Trade Representative website at www.ustr.gov.
There are seven major sub-sectors in Mexico’s automotive industry: original equipment, aftermarket parts, electric & hybrid vehicles, specialty equipment, remanufactured products, and heavy vehicles. Of these sub-sectors, CS Mexico sees strong opportunities in the following:
The OE market represents USD 79 billion dollars, making Mexico the fifth-largest auto parts producer, with 2,500 companies in the sector. Over 600 of these companies are Tier 1 suppliers. U.S. auto parts manufacturers operating in Mexico represent one-third of all companies in this sector, followed by Japan, Germany, Canada, France and South Korea. The industry is deeply integrated between our two countries. Mexico imports 49 percent of all auto parts from the United States. Mexico, in turn, exports 87 percent of its auto parts production to the United States. There are no major trade barriers in the auto sector for parts and related equipment. U.S. exporters are advised to work closely with their partner in Mexico to comply with Mexican standards for electrical and electronic safety measures, as well as with labeling requirements, to avoid any delays. Imports of used vehicles are subject to local regulations.
Original Equipment and OE Opportunities
The most effective way for U.S. suppliers of automotive parts and equipment to enter the Mexican market is through local representation or regional distribution. Assembly plants typically prefer suppliers who are located closely to minimize inventory volumes and to facilitate just-in-time or just-in-sequence deliveries. ISO and TS certifications are required by OEMs. It is easier to serve OEMs in Mexico if the U.S. exporter is already supplying them in the United States and has a supplier number. Automotive parts for components for Tier 2 suppliers represent the most exported items. However, opportunities exist for production machinery and equipment, materials, pre-assembled components, molds and tooling, cutting tools, automation process equipment, raw materials, engineering and design, finished parts, and accessories sold through local representatives or distributors. As the technology becomes more sophisticated, Mexico will search for solutions including big data, wireless technologies, innovation for high production volumes, smart packaging, and track and trace systems in logistics. Additionally, electric and hybrid vehicle production trends will continue to create demand for clean energy technologies. The main competition for OE parts is from domestic manufacturers as well as those from China, Japan, South Korea, Germany, Canada and Brazil, among others. As the Government of Mexico has implemented measures to increase consumer access to loans through financing programs, new car sales are expected to increase, leading to additional opportunities for U.S. auto part suppliers.
The Mexican Aftermarket Industry Association (Asociación Nacional de Representantes, Importadores y Distribuidores de Refacciones y Accesorios para Automóviles or ARIDRA) estimates that the aftermarket industry market size represented USD 30 billion in 2018. They predict that the industry could experience a slowdown with a decrease in vehicle usage due to occasional gas shortages and owners putting off servicing their vehicles. Nonetheless, new vehicle sales from previous years will continue to generate aftermarket growth after the five-year warranty expiration. Distribution takes place through local aftermarket parts distributors. Mexico is a price-driven market with heavy competition from China, Taiwan, Korea and local manufacturers. Only authorized dealerships can sell aftermarket parts approved by the OEM. Dealerships also provide car repair services and purchase parts from large spare part distributors. E-commerce is still nascent in Mexico although it is expected to grow by three percent by 2020.
Opportunities in Repair & Replacement Parts (Aftermarket)
ARIDRA estimates that there are approximately 32.2 million vehicles in operation with model years ranging from 1960 to 2019. Given the length of time that Mexican consumers keep their cars (15 years on average), consumers often need parts for vehicle repairs after the warranty periods expire. This creates opportunities, notably for passenger vehicles, SUVs, minivans, pick-ups and commercial vehicles.
The market in Mexico for EV and hybrid vehicles continues to develop. The Mexican Government has started to offer incentives to Mexican consumers including the exemption of local taxes and emission control verifications. In 2018 the market for electric, plug-in hybrid vehicles and hybrid vehicles reached sales of 17,807 units. Sales represented a 69 percent growth compared with 2017. Hybrid vehicle sales are particularly significant. Heavy traffic conditions and long driving distances combined with the lack of an extensive charging station network creates opportunities for new players. Market opportunities include electric motors, motor drive, battery power converter, on-board charger, auxiliary battery, charger port, traction battery bank and power electronic controllers.
Electric & Hybrid Vehicles and Parts
Vehicle modifications are limited due to government regulations. Some of these limitations include neon headlights, tailgate LED light bars, emergency and warning lighting, underbody lights, loud sound systems, dark-tinted glass, loud exhaust systems, and metal tires. Vehicles with drivetrain modifications done by the consumer will lose their original warranty. Therefore, modifications are usually carried out only on older vehicles. The most common include chrome, fiber glass, hydraulics, suspension, doors, body car, vinyl wrapping, rims, candy painting finishing, and application of ceramic and film protectants. Trends in vehicle modification follow the European style with lowered wheels and shaved features to enhance body styling. Due to exchange rates and income levels, it can take years for a consumer to customize a vehicle. Some of the most popular brands for customization are VW, Nissan, Chevrolet, and antique cars. Specialists look for sliding sunroof systems, convertible power tops and related motors, dashboard kits and custom mounted instruments, interior trim, custom shift knobs, LED lighting, and window security film with UV protection and heat reduction.
Specialty Equipment and Opportunities
Remanufactured parts are those that have been repaired with new components which may have originated in different countries. While this is a significant sub-sector, there are limited opportunities for U.S. exporters due to the local remanufacturing services available at lower costs. This niche market is price-driven. In addition, producing a Certificate of Origin can be difficult for U.S. exporters since the part numbers are so numerous and Mexico’s Free Trade Agreements typically require a majority of the content originating from a single FTA partner to obtain preferential treatment. Local companies in the market already remanufacture diesel and gasoline engines and their parts, including rotors and other high tolerance components. Other OEMs of parts or engines also remanufacture so they can offer competitive prices to their customers.
Current Mexican regulations limit the importation of used vehicles into Mexico. These measures were adopted by local governments and private vehicle associations in response to concerns about the condition of older used vehicles, including high emissions, fuel efficiency limitations, higher maintenance costs, and poor mechanical condition. Used vehicles also have a negative impact on new car sales, and there is an inherent difficulty in tracking and identifying used vehicles involved in criminal activity. The combination of these factors has prompted the Mexican Government to put these regulations in place.
Used Automotive Products
As a mature market with auto parts sold by OE parts manufacturers and aftermarket sellers, there are limited opportunities for used parts exporters to Mexico. Although used parts can be imported into Mexico, local auto parts distributors require a warranty and do not generally import large volumes as they only import parts not found locally. Although there are limited opportunities, repair equipment and replacement parts are still needed.
Mexico’s heavy vehicle sector principally consists of tractor-trailers, specialty commercial vehicles, and passenger buses. Although the principal global producers of heavy vehicles include China, Japan, Germany, and the United States, Mexico is the leading exporter of tractor-trailers used in the trucking industry. In a country where most products are transported by truck, Mexico builds 35 percent of the commercial vehicles (including trucks) sold in North America and is the fourth-largest exporter of commercial vehicles worldwide. Tractor-trailers exported from Mexico account for 58 percent of transportation vehicles sent outside of the country’s borders.
Heavy Duty Vehicle Products
Several major global manufacturers of tractor-trailers have manufacturing facilities, spare parts shops, and maintenance shops in Mexico. These include Cummins, Daimler Vehiculos Comerciales, Detroit Diesel Allison de México, DINA de México, Freightliner México, FOTON México, HINO de México, ISUZU de México, Kenworth Mexicana, Mack Trucks, MAN Truck and Bus, Volkswagen México, Navistar de México, SCANIA de México, and Volvo México.
Mexico is the fifth-largest manufacturer and exporter for specialized vehicles and parts in the construction and agriculture industries. Mexico has a large manufacturing base across the country, and exports for this equipment and machinery account for more than USD 550 million. Major markets include the United States, South Africa, Thailand, Switzerland, Australia, Uruguay, Venezuela, Chile, Paraguay, and Guatemala among others. John Deere and Caterpillar are the leading manufacturers in Mexico with over 200 dealers across the country. CNH (Case and New Holland), AGCO (Massey Ferguson), McCormick, and FOTON are other firms with a solid market presence due to their manufacturing facilities and dealers well-located to serve their clients.
Passenger bus production has a long and historic manufacturing tradition in Mexico, with manufacturing facilities across the country. Leading firms are Volvo Autobuses, Dina Camiones, Mercedes-Benz Autobuses, Scania Autobuses, MAN Latin America, Grupo Autofin, Isuzu Motors Mexico, Hino Motors Sales, American Coach de Mexico, Irizar Mexico, Beccar, Autopartes y Componentes AYCO, and RECO. Major export markets for buses manufactured in Mexico include Guatemala, Argentina, Chile, Paraguay, and South Africa.
|Mexican Automotive Industry Association (AMIA)||www.amia.com.mx|
|Mexican Aftermarket Industry Association (ARIDRA)||www.aridra.com|
|National Auto Parts Industry Association (INA)||www.ina.com.mx|
|Service Tax Administration (SAT)||www.sat.gob.mx|
|National Chamber of Freight Transport (CABACAR)||www.canacar.com.mx|
|National Association of Private Transportation (ANTP)||www.antp.org.mx|
- INA Paace Automechanika Show (OE / Aftermarket / Accessories), July 10–12, 2019, Mexico City
- Expo Transporte Anpact (transportation and buses) October 2–4, 2019, Guadalajara, Jalisco
- Expo Carga (logistics and transportation) June 25–27, 2019, Mexico City
- Logistic Summit (logistics and transportation) March 2020, Mexico City
ContactsFor further information, please contact:
Commercial Specialist, Vehicles and Auto Parts
U.S. Commercial Service—Mexico City
Tel: +52 (55) 5080-2000 ext. 5218
Commercial Specialist, Trucks and Cargo
U.S. Commercial Service—Mexico City
Tel: +52 (55) 5080-2000 ext. 5220
Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.