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Mexico Autos Report Q1 2010Published by: Business Monitor International Published: Nov. 10, 2009 - 55 Pages Table of Contents
AbstractBMI expects Mexico to return to a much more integrated autos industry after recovering from theeconomic crisis thanks to the efforts of carmakers such as Volkswagen (VW) and BMW, which arelooking to strengthen the local supply chain in the country. Although recovery in the domestic marketseems a distant reality as of now, we expect Mexico’s long-term growth to be driven by plannedinvestments by carmakers, which should take its total production capacity to 2.15mn units by 2014.Estimates from the Mexican Auto Industry Association (AMIA) show that in August 2009, carmakersincreased production by 23.5% month-on-month, making it the second consecutive monthly increaseof the year. BMI, in agreement with the general consensus, believes that the spike was mainly anoutcome of the US$3bn ‘cash-for-clunkers’ programme introduced in the US. With economicpessimism at its peak, we have revised down Mexico’s production forecast to a 30% y-o-y fall by end-2009 to be followed by a more robust 9% y-o-y increase in 2010. We stress that the key to Mexico’s autos recovery will be a resurgence in its exports to the US, giventhat the market relies on the latter for as much as 65% of its total production. BMI expects Mexico’sexports to reach rock bottom in 2009, down more than 30% y-o-y, to be followed by a much stronger10% y-o-y recovery in 2010. Meanwhile, domestic demand, which fell 24.6% y-o-y during 7M09, islikely to end up at 900,000 units by end-2009, down from 1.06mn units sold in 2008. In 2010,however, a more nascent 6.4% y-o-y increase is likely, which will set the pace for the market to reach1.19mn units by end-2014. Mexico’s autos industry has always been greatly influenced by US developments. The country istipped to become the focus of the joint venture (JV) between Chrysler and Fiat with the US firmreportedly considering building the Italian carmaker's 500 model at its Mexican plants. This has led tothe cancelation of a vehicle exchange project between Nissan Motor and Chrysler, for which Mexicowould have been the key production site. Mexico’s biggest weakness going forward will be the fact that much of the country’s potential forvehicle production has already been tapped, which puts a limit on the potential returns carmakers mayachieve in the country. This places Mexico in fourth position in BMI’s Business EnvironmentRankings for the autos industry in the Americas. However, by reaching out to newer markets such asAsia and Europe, the industry can hope to boost its future potential and ratings. Get Full Details About This Report >> |
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