Mexico - E. Automotive Parts and SuppliesMexico - 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||3,399||3,465||3,932||4,168|
|Imports from the U.S.||149.5||174.8||159.7||144.0|
|Imports Used Vehicles||179.5||147.8||123.6||101.4|
|Total Market Size*||1,473.5||1,584||1,735||1,968|
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*||33.0||35.0||33.0||34.0|
|New Passenger Vehicle & Light Trucks|
|Imports from the U.S.||3.0||3.6||3.4||3.4|
|Medium & Heavy-Duty Trucks|
|Imports from the U.S.||0.3||0.4||0.3||0.3|
|Total Market Size***||N/A||N/A||N/A||N/A|
*Local production is calculated by applying the Mexican Government estimate of automotive production as a percent of GDP and converting the figure to U.S. Dollars. This is a rough estimate that cannot be directly compared to the export and import figures in the remainder of the table.
**The pronounced jump in exports from 2016 to 2017 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: Countryeconomy, Mexican Automotive Industry Association via El Financiero, & U.S. Department of Commerce, Bureau of the Census, Foreign Trade Division.
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 through Nissan–Daimler, Hyundai produces through its Kia partner, and BMW is building a plant in San Luis Potosi. Together, these companies produce more than 40 brands and 500 models. Around 82 percent of the vehicle production is devoted to exports, with the remaining 18 percent destined for the domestic Mexican market. Auto sales have shown consistent growth reaching over 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. Nissan is the top seller, followed by General Motors, Volkswagen, Toyota, FCA Group, Honda, Kia and Ford. These brands represent 78.2 percent of the market in terms of sales.
Mexico Auto Parts Market for OEM and Aftermarket
(Figures in USD billions)
|Total Local Production||82.0||85.0||92.0||94.0|
|Imports from the U.S.||30.0||28.3||29.7||31.1|
|Total Market Size*||56.3||62.8||67.6||71.0|
*Total market size = (total local production + imports) - exports
Source: National Auto Parts Industry Association (INA) & United States Department of Commerce, Bureau of the Census, Foreign Trade Division.
The U.S. Commercial Service Mexico is happy to assist you in exploring market opportunities. There are six major sub-sectors in Mexico’s automotive industry: original equipment, aftermarket parts, specialty equipment, remanufactured products, and heavy vehicles. Of these six, CS Mexico sees opportunities in the first three, as we outline below.
Original Equipment and OE Opportunities
The OE market represents more than USD 67 billion dollars, making Mexico the fifth largest auto parts producer, with 2,500 companies in the sector. U.S. auto parts manufacturers operating in Mexico represent one-third of all companies in this sector, followed by Japan, Germany, South Korea, and France. The industry is deeply integrated between our two countries. Mexico imports 70 percent of all auto parts from the United States. Mexico, in turn, exports 90 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. More information is available upon request.
The best way for U.S. suppliers of automotive parts and equipment to enter the Mexican market is through local representation or regional distribution. Assembly plants usually prefer geographically closely located suppliers. This enables them to minimize inventory volumes and to facilitate just-in-time sequence deliveries. Additionally, 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 already has a supplier number. The most-exported parts are components for Tier 2 suppliers. However, there are other opportunities 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 in the sector becomes more sophisticated, Mexico will search for newer technology such as 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 create additional demand for clean energy technologies. The main competition for OE parts is from domestic manufacturers as well as those from Japan, Canada, the U.K., France, Italy, Austria, and Germany. 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.
Opportunities in Repair & Replacement Parts (Aftermarket)
The Mexican Aftermarket Industry Association (ARIDRA) estimates that the aftermarket industry market size represents USD 24.3 billion and will continue to grow since, on average, Mexican consumers keep their cars up to 15 years. Distribution takes place through local distributors of aftermarket parts. Mexico is a price-driven market due to heavy competition from China, Taiwan, 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.
ARIDRA estimates that there are approximately 29.9 million vehicles in operation with year models ranging from 1970 to 2016. Given the length of time Mexican consumers keep their cars (15 years on average), consumers need parts for vehicle repairs after warranty periods expire. This creates opportunities, notably for passenger vehicles, SUVs, minivans, pick-ups and commercial vehicles (3.5 tons).
Specialty Equipment and Opportunities
Vehicle modifications in Mexico are limited due to government regulations. Some of these limitations include neon headlights, 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 on older vehicles. The most common include chrome, fiber glass, hydraulics, suspension, doors, body car, vinyl wrapping, rims, painting, 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. There are a few clubs where independent owners gather and organize car shows. 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, headliners, LED lighting, and window security film with UV protection and heat reduction.
Remanufactured parts are considered those that were 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 and some other factors. This niche market is price-driven. In addition, producing a Certificate of Origin might be difficult for U.S. exporters since the part numbers are so numerous and Mexico’s Free Trade Agreements typically require the majority of content 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.
Used Automotive Products
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 and others prompted the Mexican Government to put these regulations in place.
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.
Heavy Duty Vehicle Products
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 the 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 60 percent of transportation vehicles sent outside the borders of the country.
Several major global manufacturers of tractor-trailers have manufacturing facilities, spare parts shops, and maintenance shops in Mexico. They 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. It has a large manufacturing base across the country, and exports for this equipment and machinery account for more than USD 500 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 solid presence due to their manufacturing facilities and dealers well-located to serve their clients.
Last, but not least, passenger bus production represents the longest 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.
|AMIA – Mexican Automotive Industry Association||http://www.amia.com.mx|
|ARIDRA – Mexican Aftermarket Industry Association||http://www.aridra.com|
|INA – National Auto Parts Industry Association||http://ww.ina.com.mx|
- INA Paace Automechanika Show (OE / Aftermarket / Accessories), July 11–13, 2018, Mexico City
- Expo Transporte Anpact (transportation and buses) October 2-4, 2019, Guadalajara, Jalisco
Commercial Specialist for Vehicles and Auto Parts
U.S Commercial Service – Mexico City
Tel: + 52 55 5080 2000 x 5218
Commercial Specialist for Trucks and Cargo
U.S. Commercial Service – Mexico City
Tel: + 52 55 5080 2000 x 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.
Mexico Automotive Trade Development and Promotion