Mexico - Commercial Guide
Automotive Industry

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2020-08-17

Mexico is a major market for U.S. vehicles, light vehicles, trucks, buses, autoparts, and supplies.

Overview
The automotive sector is one of Mexico’s most significant industries, employing over one million people throughout the country. The sector is divided between the passenger vehicle sector and heavy vehicles for cargo, construction and agriculture. Mexico is the sixth-largest passenger vehicle manufacturer in the world, producing 3.7 million cars annually. It is the fifth-largest producer of autoparts worldwide with USD 99 billion in annual revenues and is the largest export market for U.S. autoparts. Mexico is the sixth-largest manufacturer of heavy-duty vehicles for cargo, and it is the largest tractor truck exporter worldwide, accounting for the most heavy-duty vehicle exports to the United States. It is also the fourth-largest exporter of heavy-duty vehicles for cargo and the second-largest export market for U.S. heavy-duty trucks. 

The size of Mexico’s passenger vehicle market and our shared border provide a robust market for U.S. Original Equipment Manufacturers (OEMs) and aftermarket autoparts. In addition, investments by established automakers and new OEMs have attracted strong Tier 1 and Tier 2 supplier bases. Due to COVID-19, industry expects a five percent decline for vehicle production and 40 percent decline for autoparts this year.

Automotive manufacturers are primarily concentrated in the northern region of Baja California, Sonora, Chihuahua, Coahuila, Nuevo Leon and San Luis Potosi. Nonetheless, OEM plants are also based in Guanajuato, Aguascalientes, Jalisco, Estado de Mexico, Hidalgo, Morelos, Puebla and Veracruz. In terms of their supply chain, auto parts producers are located close to these plants, principally in Coahuila, Chihuahua, Nuevo Leon, Guanajuato and Estado de Mexico, although are found in other parts of the country as well. The heavy-duty manufacturing plants are mainly concentrated in northern Baja California, Coahuila, Nuevo Leon, San Luis Potosi, Guanajuato, Queretaro and Hidalgo.

The United States–Mexico–Canada Agreement (USMCA) went into effect on July 1, 2020. USMCA changed the rules of origin for the automotive sector, requiring that 75 percent of automotive content be produced in North America and that core autoparts originate from the United States, Canada, or Mexico. Following a phase-in period, only goods meeting these content requirements 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.

Mexico Passenger Vehicle Sales in Mexico
(Figures in thousands of vehicles)

 

2016

2017

2018

2019

2020 (Estimated)

Total Local Production

3,465

3,932

3,908

3,750

3,730

Total Exports

2,768

3,102

3,449

3,333

3,357

Total Imports

886.7

906.3

929.8

906.8

900.0

Imports from the U.S.

174.8

159.3

140.6

126.0

130.0

Imports Used Vehicles

147.8

123.6

141.7

159.4

150.0

Total Market Size*

1,584

1,736

1,388

1,323

1,273

Exchange Rates

18.68

18.91

19.23

19.26

20.00

*Total market size = (total local production + imports) - exports
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)

 

2016

2017

2018

2019

2020 (Estimated)

Total Local Production*

35.0

33.3

39.2

38.2

36.2

Total Imports

32.7

33.7

37.5

35.5

35.0

New Passenger Vehicle & Light Trucks

Total Exports

40.8

46.9

52.6

58.3

55.3

Imports from the U.S.

3.6

3.4

3.2

2.9

3.0

Medium & Heavy-Duty Trucks

Total Exports

8.9

10.7

12.1

13.1

13.0

Imports from the U.S.

0.4

0.3

0.4

0.4

0.4

Exchange Rates

18.68

18.91

19.23

19.26

20.00

*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.
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 2025. In 2019, Mexico ranked as the sixth-largest vehicle producer with 3.7 million units. Out of the production, 64 percent were SUVs, minivans, and pick-ups, while the remaining 36 percent were vehicles. Established automakers in Mexico include Audi, Baic Group, BMW, 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 Toyota opened its second plant in Apaseo el Alto, Guanajuato last year. The industry, with over one million jobs and 300 R&D centers, produces more than 50 brands and over 500 models through a network of 2,361 car dealerships nationwide. Around

90 percent of vehicle production in Mexico is devoted to exports, with 79 percent going to the United States. 
Auto sales decreased by seven percent with 1.3 million units in 2019 compared to 1.4 million units in 2018. Among domestic vehicle sales, Nissan is the top seller, followed by General Motors, Volkswagen, Toyota, Kia, Honda, FCA Group, Mazda, Ford, Hyundai, and others. These brands represent 82 percent of the market in terms of sales.

Mexican Autoparts Market for OEM and Aftermarket
(Figures in USD billions)

 

2016

2017

2018

2019

2020 est.

Total Local Production

85.0

92.0

97.0

99.0

57.0

Total Exports

62.2

73.5

79.3

81.0

27.4

Total Imports

40.0

49.1

54.1

55.3

50.0

Imports from the U.S.

28.3

29.7

26.7

27.3

29.0

Total Market Size*

62.8

67.6

71.8

73.3

79.6

Exchange Rates

18.68

18.91

19.23

19.26

20.00

*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.

Leading Sub-Sectors and Opportunities
With the entry into force of the United States–Mexico–Canada Agreement (USMCA) on July 1, 2020, 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:

Original Equipment and OE Opportunities
The OE autoparts market represents USD 73 billion dollars, making Mexico the fifth-largest producer of autoparts, with over 2,500 companies in the sector. Over 600 of these companies are Tier 1 suppliers. U.S. autoparts manufacturers operating in Mexico represent 18 percent 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 49.4 percent of all auto parts from the United States. Mexico, in turn, exports 86.9 percent of its autoparts production to the United States. U.S. exporters are advised to work closely with their partners in Mexico to comply with Mexican standards for electrical and electronic safety measures, as well as with labeling requirements, to avoid any delays. 

The most effective way for U.S. suppliers of autoparts and equipment to enter the Mexican market is through local representation or regional distribution. Assembly plants prefer suppliers who are located closely to minimize inventory volumes and to facilitate just-in-time or just-in-sequence deliveries. 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 related to components for Tier 2 suppliers represent the most exported items from the United States. 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.  

Opportunities in Repair & Replacement Parts (Aftermarket)
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 28.5 billion in 2019. They predict the industry will experience a slowdown in 2020 due to COVID-19 impacts. Nonetheless, new vehicle sales from previous years will continue to generate aftermarket growth after the five-year warranty expiration. Mexico is a price-driven market with heavy competition from China, Taiwan, Korea and local manufacturers. Only authorized dealerships can sell aftermarket auto parts approved by the OEM. Dealerships also provide car repair services and purchase auto parts from large distributors. 
ARIDRA estimates that there are approximately 33.4 million vehicles in operation throughout Mexico with model years ranging from 1965 to 2018. Given the length of time that Mexican consumers keep their cars (15 years on average), consumers often need aftermarket parts for repairs after the warranty periods expire. 

Electric & Hybrid Vehicles and Parts
The market in Mexico for EV and hybrid vehicles continues to develop. The Mexican Government offers incentives to Mexican consumers including the exemption of local taxes and emission control verifications. In 2019 the market for electric, plug-in vehicles and hybrid vehicles reached 25,608 units, representing a 43.8 percent growth over 2018. Hybrid vehicle sales are particularly significant. Market opportunities include electric motors, motor drive, battery power converter, on-board charger, auxiliary battery, charger port, traction battery bank and power electronic controllers. 

Specialty Equipment and Opportunities
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.

Remanufactured Parts
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.

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 has 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
Heavy-duty vehicle production is a major sector in Mexico, with U.S. companies and content representing a significant segment. The industry is comprised of 14 manufacturers and assemblers of commercial vehicles including buses, trucks, tractor trucks and engines supporting 18,500 jobs. There are four broad categories of production: Class 4-8 tractor-trailers, which are medium to heavy trucks hauling seven to 16.5 tons; five-axel “semi” tractor trucks; Class 5-8 passenger buses (school, shuttle, transit, and long-haul buses); and Class 3 “box” trucks.

Mexico is the leading global exporter of tractor trucks and largest exporter into the United States with 81 percent of its production. It also ranks as the sixth-largest manufacturer of heavy-duty vehicles for cargo with eleven manufacturing plants. Mexico is the fourth-largest exporter of heavy-duty vehicles for cargo and the second-largest export market after Canada for U.S. medium and heavy-duty trucks. 

Mexican tractor-trucks account for 56 percent of the country’s transportation vehicle exports. The Mexican Buses, Trucks & Tractor Trucks National Manufacturers Association or ANPACT, represents top industry players including Cummins (Columbus, IN), Detroit Diesel Allison (Detroit, MI), Freightliner–Daimler Vehículos Comerciales (Portland, OR), Kenworth Mexicana (Kirkland, WA), Mack Trucks de México (Greensboro, NC), and International-Navistar de México (Lisle, IL). Mexican company Dina Camiones is headquartered in Hidalgo. Other foreign-headquartered companies are Scania Mexico (Sweden), Volvo Group de México (Sweden), VW Camiones y Autobuses (Germany), Man Truck & Bus de México (Germany), Mercedes-Benz Autobuses (Germany), Hino Motors Sales Mexico (Japan), and Isuzu Motors (Japan).

The Mexican government ratified a new set of emission standards applicable to heavy-duty vehicles scheduled to come into force on January 1, 2021. The standards fall under the Normas Oficiales Mexicanas (NOM) number 044-SEMARNAT-2017 and require all new heavy-duty vehicles manufactured and sold in Mexico to comply with advanced emission-reduction technologies. The technologies are called EPA 10 and Euro VI, and they enable engines to use ultra-low sulfur diesel (ULSD). The Mexican regulation would align the country with United States, Canadian, and

European Union standards. 
Tractors in Mexico are produced by six players, over 80 percent of whose exports go to the United States. 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 key players with a solid market presence.

Passenger bus production has a long and historic manufacturing tradition in Mexico, with facilities across the country. Leading firms are Volkswagen, International – Navistar de Mexico, Volvo Autobuses, Marcopolo Mexico, Dina Camiones, Mercedes-Benz Autobuses, Scania Autobuses, MAN Truck & Bus, Grupo Autofin, Isuzu Motors Mexico, Hino Motors Sales, American Coach de Mexico, Irizar Mexico, Beccar, Autopartes y Componentes AYCO, RECO, Ayats, and Master Road. 
 

Web Resources

Mexican Automotive Industry Association (AMIA)

www.amia.com.mx

Mexican Aftermarket Industry Association (ARIDRA)

www.aridra.com

Mexican Trucks and Buses Manufacturer’s Association (ANPACT)

www.anpact.com.mx

National Auto Parts Industry Association (INA)

www.ina.com.mx

National Chamber of Freight Transport (CABACAR)

www.canacar.com.mx

National Association of Private Transportation (ANTP)

www.antp.org.mx

Events

Contacts
For further information, please contact:
Monica Martinez    
Commercial Specialist, Vehicles, Trucks, Buses and Autoparts 
U.S. Trade Center
Liverpool 31, Col. Juarez
C.P. 06600 Mexico City 
Tel: +52 55 5080-2000, ext. 5218
Monica.Martinez@trade.gov