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Report
The Future of the
Mexican Automotive Industry
INDEX
• Current Position of the Auto Industry
• New Investments Increase Capacity
• World Automotive Market
• Challenges and Future Vision
Current Position of the Auto
Industry
The automotive industry has had a very good performance
• From 2006 to 2013, vehicle´s production and exports grew 5.8% and 6.7%
annually in average, respectively.
• During this period, the value of autoparts production showed an annual
growth average rate of 12.9%.
AUTOPARTS PRODUCTION
VEHICLE EXPORTS
VEHICLE PRODUCTION
(THOUSANDS OF MILLION DOLLAR)
(MILLION OF UNITS)
(MILLION OF UNITS)
2.4
48.2
2.9
1.5
2.0
20.6
2006
Source: AMIA and INEGI
2013
2006
2013
2006
2013
There is still a positive trend in 2014
• From january to june 2014, vehicle production and exports grew 7.5% and 11.2%,
respectively.
• Value of auto parts production increased 7.8% in the same period.
VEHICLE PRODUCTION
VEHICLE EXPORTS
(MILLION OF UNITS)
(MILLION OF UNITS)
AUTOPARTS PRODUCCION
(THOUSANDS OF MILLION DOLLAR)
30.0
1.9
Source: AMIA and INEGI
27.8
1.4
1.7
Ene - Jul 2013
1.5
Ene - Jul 2014
Ene-Jul 2013
Ene-Jul 2014
Ene-jul 2013
Ene-jul 2014
Mexico's automotive industry improves ranking in the world
• Up to july 2014, Mexico is the 7th most important vehicles producer in the
world, which means a higher level compared to 2013. As well, we are the 4th
most important export.
MAIN COUNTRIES VEHICLES PRODUCERS
(Million of Units)
Rank
Country
MAIN COUNTRIES VEHICLES EXPORTERS
(Million of Units)
Jan-July
2014
Rank
1
Japan
4.87
2
Germany
4.75
3
South Korea
2.14
4
5
Mexico
Spain
2.42
2.10
6
Canada
2.06
USA
France
2.05
1.39
Country
2013
1
China
13.5
2
USA
6.6
3
Japan
5.1
4
Germany
3.6
5
South Korea
2.8
6
India
2.1
7
Mexico
1.9
7
8
8
Brazil
1.7
9
UK
1.22
9
Canada
1.3
10
Czech Republic
1.01
10
Thailand
1.1
Source: OICA, AMIA, Ward´s Auto
Mexico diversifies its auto exports destination
• Although United States is still the main destination of Mexican exports, during
latest years, a diversification has been evident.
3,000,000
Vehicle Exports by Destination
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
2003
2004
2005
Resto del Mundo
Source: AMIA.
2006
2007
Brasil
2008
Europa
2009
Canadá
2010
2011
Estados Unidos
2012
2013
In Mexico, there are some auto facilities ranked among the most
efficient of the world
• There are some facilities in our country, that are ranked among the top ten in
engines production, as well as in stamping processes.
More Efficient facilities for the Production
of Engines
More Efficient facilities for Autoparts
Satamping
(Hours/Engines)
(Parts/Hour)
3.32 3.45 3.46
3.19
3.07 3.09
3.32 3.45 3.46
3.19
3.07 3.09
2.53 2.60 2.66
2.53 2.60 2.66
Hyundai Mongtgomery
(USA)
GM Parma, Ohio
(USA)
Toyota Princenton West
(USA)
Nummi
(USA)
Chrysler Toluca
(México)
GM Silao
(México)
Ford Dearborn
(USA)
Chrysler Belvidere
(USA)
Toyota Cambridge
(Canadá)
GM Romulus
(USA)
Chrysler Saltillo
(México)
Chrysler Mark Av. II
(USA)
GM Tonawanda
(USA)
GM Flit North
(USA)
GM Flint South
(USA)
Toyota West Virginia
(USA)
Toyota Georgetown
(USA)
GM Spring Hill
(USA)
Chrysler Dundee GEMA
(USA)
Source: The Habur Reporrt
Toyota Georgetown
(USA)
1.84
1.84
Mexico offers significant competitive advantages in the automotive
industry.
• Some cities in our country, where automotive clusters have been established, are identified
as those highly competitive in parts assembly costs. Puebla, Aguascalientes and Monterrey
are good examples.
• At the same time, Mexico offers low assembly costs compared to other 9 important vehicles
producers. Difference between México and USA, shows that in our country average costs
are around 20% lower than in that country.
Position in automotive parts assembly by city
Advantage in automotive assembly costs
(Position of 102 considered cities)
140
101
83
90
(Index 100 = USA)
120
100
63
80
60
0
Mexico
Australia
USA
Canada
France
United Kingdom
Netherlands
Italy
Germany
Japan
Hamamatsu, Japan
Manchester, UK
Detroit, USA
20
Paris, France
40
Melbourne, Australia
8
Adelaide, Australia
7
Greenville-Spartanburg, USA
6
Shreveport, USA
4
Monterrey, Mexico
3
Puebla, Mexico
2
Aguascalientes, Mexico
Reynosa, Mexico
1
19
Montgomery, USA
18
Improvement in mexican automotive industry is evident
• Mexico increased its contribution in automotive imports of USA. In 2014*
reached 29.6%
35.0
29.6%
30.0
25.0
20.0
15.0
10.0
5.0
Alemania
México
Japón
Canadá
0.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Source: Census Bureau
* Data to July
New Investments in Mexico will
Increase Production Capacity
OEM´s investments announcements have been a constant in Mexico
• From 2009 to 2014, new investments for 17,571 million dollars have been
announced in the automotive sector; more than 40% (7,088) correspond
to current federal administration.
• With these new investments, automotive industry production capacity
will grow in 1.8 million vehicles annually, when all facilities operate fully.
• Additionally, more than 30 thousand employees will be generated in
assembly plants with all mentioned investments. As a consequence, well
trained people will be required by the industry.
Inversiones anunciadas, 2009-2014.
(millones de dólares)
Foreign Direct Investment in autoparts industry has shown a good
performance
• The investments of the OEM´s boosted FDI in the auto parts sector.
• From 2009 to June 2014 FDI in auto parts sector accumulated more than 10
thousand million dollar.
Auto parts FDI,
(Thousand Million Dollar)
1.8
1.4
1.3
1.6
1.2
1.2
0.9
2007
2008
2009
Source: Secretaría de Economía
0.8
2010
2011
2012
2013
Ene-Jun
2014
World Automotive Market Trends
Global demand for vehicles by 2017 is estimated in more than
104 million of units
• Demand in North America is expected to grow by 30%.
• The increase in the productive capacity of Mexico could increase the
participation of our exports to the United States by 3%.
New Vehicle Demand by Region
2011
2017
52.2
30.3
23.8
20.4
19.0
15.6
5.3
Europa
Source: KPMG.
Note: includes heavy trucks
Asia Pacífico
Norte América
8.6
América del Sur
Changes is Location of automotive manufacturing
• From 2000 to 2011, vehicles production in developed countries reduce 24%,
while in developing countries production grew by 200%.
• Mexico has remained among the top 10 producers of vehicles worldwide. In
2013, our country was ranked in the number 8. As mentioned, currently our
country is the 7th most important producer.
• Due to the changes in the global automotive manufacturing, Mexico has the
opportunity for structural transformation, considering the following
elements:
 Innovation
 Human capital
 New technologies
New environmental, security, connectivity and comfort
 Global environment:
o Countries regulations aimed at protecting the environment.
o New requirements of consumers related to safety vehicle,
sustainability (efficiency in the performance of fuels and reduced
emission of pollutants), connectivity (interconnection between
different mobile devices and internet) and comfort.
 Considering this environment, to play a good roll in long term, it is
important for Mexico to be among the main destinations of investment in
research, development and automotive design.
“Inventario de capacidades nacionales para el desarrollo
tecnológico automotriz”
Main findings
 There are technology development capabilities along all vehicle systems.
 The level of technological development in Mexico offers opportunities to
improve; only a third part focuses on innovation development.
 more than 5,000 employees focused on R & D, those which have a high
number of years of experience.
 Automotive industry spends a higher percentage of time in training, even
though there are more than 700 relevant programs for the automotive
sector offered by the Academy.
 The Academia and Research Centers have more staff prepared the industry
and devote significant time to research, but productivity has opportunity to
be improved.
“Inventario de capacidades nacionales para el desarrollo
tecnológico automotriz”
 In Infrastructure, 360 facilities and more than 2,000 relevant teams in the
country covering all vehicle systems were identified.
 The equipment utilization levels are low and 95% of the organizations surveyed
are willing to providing his team to other companies.
 There are opportunities to expand the inventory of specialized equipment
 In projects, there is an important link between Industry-Academy-Government,
but a significant percentage of them are not focused on product innovation.
Challenges and Future Vision
Challenges and Future Vision for Automotive Industry in Mexico
 The U.S. International Trade Commission estimated that the added value of
Mexican exports is 26.9%, which represents a high potential for the Mexican
automotive industry.
 This means that Mexico has an opportunity area in increasing the national
content of the automotive goods, that is why it is necessary to reinforce the
automotive value chain and incorporating Tier 2 and Tier 3 producers.
 New trends like those focusing new and stricter standards on energetic
efficiency and emissions, represent an opportunity for the development of
new technologies and structural changes in the automotive sector at a
global level.
 As most of Mexico´s production goes to foreign markets; and being part of
the global chain of many of the biggest OEM’s, Mexico could take advantage
of these new global trends in the future and be able to insert in the
development of the new products that fulfill these new standards.
Moreover, a positive relation is observed between trade and the development of
industries with high added value.
• As shown in the chart, higher levels added value sectors are related to higher
trade. Transport equipment manufacturing is ranked at the top, however
there is still opportunity to improve if innovation and design investment
increases.
Imports vs added value
(Average annual growth 99 – 09)
Exports vs added value
(Average annual growth 99 – 09)
Ttransport equipment
Source: INEGI Economic Census and UN COMTRADE (NAICS code)
Note: in red those industries classified as "high technology" according to The World Bank
Ttransport equipment
23
Strategies for Automotive Industry Development
• Main aspects that are being considered by Secretaría de Economía to
improve automotive industry's competitiveness are:
 Human Capital Training
 Investment Attraction
 Support to Innovation
 Supplier development
 Federal Government has some supporting programs to help automotive
industry to improve its global position, among which there are the
followings:
Federal Supporting Programs
Program
SE/PRODIAT
SE/PROSOFT
INADEM
PROMEXICO
CONACYT
BANCOMEXT
NAFIN
MEXICO FIRST
Features
Training, Certifications and technological innovation
Software
"Startup" NAFIN
full projects
Internacional promotion
Seed capital
Training and technical asisitencia
Seed capital
Innovation support
FINNOVA
Suppliers Financing
Financiamiento a Proveedores
Certifications in TI
Automotive Industry Vision
PRODUCCIÓN*
(MILLONES DE UNIDADES)
EXPORTACIÓN*
VALOR AGREGADO**
(MILLONES DE UNIDADES)
(PORCENTAJE DEL PIB)
3.5
4.0
4.5
3.2
2.6
2.1
2011
2017
*/ Light vehicles
**/Participation of Automotive Industry in GDP.
2011
2017
2011
2017

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