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Mexico Poised to Be World's Third-largest Producer of Automotive Parts

Date:2024-06-25 Author:Mia Source:www.chinatrucks.com

Francisco González, Chairman of the Mexican Association of Automotive Parts Manufacturers (INA), recently stated that due to increased foreign direct investment and more companies choosing Mexico as a manufacturing hub for automobiles, the country is on track to achieve this milestone.

Benefiting from the United States-Mexico-Canada Agreement (USMCA) and the trend of nearshore outsourcing, Mexico had already become the world's fourth-largest producer of automotive parts by the end of 2023, with a total output value reaching $121 billion USD.

Francisco González noted that Mexico is actively striving to become the third-largest automotive parts manufacturer globally, a position currently held by Japan. He stated, "The growth momentum remains strong. We have just surpassed Germany to claim the fourth position, and Japan's situation is more complex, with our growth outpacing theirs as their scale diminishes. Therefore, we are hopeful to move up to third place in the coming years."

Explaining further, he said, "Several factors are converging, such as the USMCA requirements for automakers to increase the proportion of production within North America, meaning more automotive parts must come from the region." Another factor contributing to Mexico's automotive industry growth is the production of electric vehicles, with two companies already manufacturing electric cars in Mexico.

The National Association of Automotive Parts Manufacturers in Mexico (INA) forecasts that Mexico's total automotive parts output will reach $125.5 billion USD in 2024, marking a 3.1% increase from 2023. Data from the U.S. Department of Commerce also shows that Mexico broke historical records for automotive parts exports to the United States in the first four months of 2024, totaling $28.373 billion USD.

The U.S. International Trade Commission (USITC) states that granting duty-free treatment to cars and parts produced in Mexico would help integrate North American production, while rules of origin encourage increased investment in North American car production. Automotive trade (imports and exports of cars and parts) constitutes the largest share of total North American trade under the USMCA framework, accounting for approximately 22%.

Mexico maintains high competitiveness in automotive parts production, with Mexican companies such as Katcon, Metalsa, Vitro, Rassini, Sisamex, KUO, and Nemak increasingly internationalizing. Meanwhile, foreign automotive parts companies like Bosch, Continental, Denso, ZF, Autoliv, Magna International and Valeo are also expanding their operations in Mexico.

These companies produce a wide range of automotive parts, including braking systems, transmissions, steering systems, chassis components, propulsion systems, air conditioning systems, driver assistance technologies, seatbelts, and airbags.


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