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Mexico’s Automotive Industry: Strengths and Weaknesses

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Strengths

• Mexico is the country that has signed the most free trade agreements worldwide, which facilitates exportations of vehicles and autoparts.

• It has economic stability and tax certainty for the next five years.

• Mexico’s geographic location favors exports of vehicles and autoparts to the main markets in the world.

• The Mexican automobile sector has the most modern and efficient installed capacity for vehicle production worldwide.

• Production capacity is highly technical and very flexible, which makes it possible to manufacture several types of models.

• The cost of Mexican labor is very competitive and it is rated as one of the best worldwide.

• New automobile clusters have been created and consolidated in central Mexico.

• Mexico’s car industry has vast experience in manufacturing vehicle components and autoparts.

• Logistics costs of exportations are significantly reduced given the proximity to the US.

• There are public and private, colleges and universities, which teach undergraduate and postgraduate courses aimed at the automobile industry.

 

Weaknesses

• High dependence of the US market.

• Low internal market growth over the next few years.

• Lack of programs to encourage car sales in Mexico.

• Lack of programs and financing to develop supply sources.

• Lack of government interest in developing programs to promote purchases of hybrid or electric cars.

• A large portion of electricity is generated with fossil fuels.

                                               

                                                                                                                                                                                                               Source: PWC ”Doing Business in Mexico”

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