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Mexico's Exports on Automotive Industry ranks 4th World Wide

09 July, 2014

Its geographical location, its macroeconomic and political stability, low inflation, strength and the size of its domestic market, are some of the factors that put Mexico as an attractive country for investors in the automotive industry.

Thanks to 12 Commercial Trades with 42 countries the auto industry has taken advantage of the conditions of this emergent country. Since 1995 it has become the dominant player in the generation of foreign exchange. The amount generated in 2013 was almost the same as the oil and remittances together. 

Definitely the auto industry has found its nest in Mexico, not only assembly but also the production of auto parts has been highly successful. In 2012, Mexico was the No. 1 auto parts exporter to the United States, and today 89 of the 100 companies producing auto parts globally has presence in the country. Currently 1 in 10 cars driven in the U.S. were manufactured in Mexico.

"The automotive industry contributes 19 percent of gross domestic product (GDP) and accounts for 24 percent of total Mexican manufacturing exports in the world." - Eduardo Solis Sanchez, Executive President of the Mexican Association of the Automotive Industry.

This industry not only benefits the country's foreign exchange earnings, but job creation is greatly benefited. In 2012, according to figures from INEGI (National Institute of Statistics Geographic and Informatics) over 530 thousand jobs directly or indirectly were generated by this industry, and between April 2013 and April 2014 this figure increased by 12.8%. 

This year, European and Asian car companies plan to invest 3.5 billion dollars reported Francisco Gonzalez, CEO of ProMéxico. This institution is in talks with 350 companies in these regions, seeking to take advantage of Mexico's trade agreements to become international.

"The main advantage we offer to foreign companies is the free trade agreements Mexico has with over 40 countries, plus it has skilled and competitive labor costs. The vast infrastructure in the country allows the output to major markets such as the U.S.,South America and China" - Francisco Gonzalez

Thanks to structural reforms push by President Enrique Peña Nieto, the country is becoming a magnet for investment. In the first 5 months of 2014 the value of automotive exports exceeded 4.25 billion dollars and this is expected to continue to increase once the secondary laws of such reforms take effect.

Topics: Industry