The webinar for Overview of the Automotive Sector in Mexico took place on March 26, 2018!
The automotive sector in Mexico, aftermarkets parts overview, and PAACE Automechanika Trade Show, which Temel Gaskets is also one of the attendances of the fair for many years, has been discussed in the webinar sections.
This webinar was a great opportunity to learn about the massive opportunities available on automotive sector in Mexico and PAACE trade Show.
Victor Tapia from Temel Gaskets heard from the experts on this dynamic market for the automotive sector:
Monica Martinez – Commercial Specialist, U.S. Embassy – Mexico City
Alejandro Calderon – President of the Mexican Association of Spare Parts Distributors
Mexico is the 5th Largest Producer in the World
In the first block of the webinar, Monica Martinez, a commercial specialist at the U.S. Embassy in Mexico City, explains the importance of the automotive sector in Mexico.
There are currently 12 foreign light passenger vehicle manufacturers, which produce 500 models in 20 different facilities. On the other hand, there are 9 heavy duty truck automakers producing more than 100 models in 12 different plants across the country.
In 2017, 3.9 million cars produced. This number is expected to increase to 5 million by 2020, positioning the country as the 5th largest producer in the world.
While the demand for new vehicles in the domestic market is low, it is expected to increase in the next couple years. Last year, 75% of new units were exported to the US and Canada alone. Other important commercial partners in Latin America such as Chile and Peru imported close to 8%.
The auto parts industry for Original Equipment Manufacturers (OEM) is also booming. It accounts for US $85 billion. Thus, it places the country as the 6th largest exporter with more than 2500 international companies with operations across the country. Their presence has created a hub for manufacturers; for example, in central Mexico, there are more than 100 plants producing seats, air conditioning, interior components, engine parts, electrical systems, and suspensions.
On the other hand, the western part or commonly known as “Bajio”. It has 142 plants producing rubber, transmission parts, electrical components, engine parts and steering wheel.
Because of its proximity to the US, the northern part has a greater concentration of OEMs with 192 plants producing plastic parts, machining, engine components, and interiors.
22% Growth in VIO – The Great Opportunity for the Aftermarket
Alejandro Calderon, president of the Mexican Association of Spare Parts Distributors (ARIDRA for its acronym in Spanish) presented in the second block of the webinar.
Most news and studies focus on new vehicle manufacturing in Mexico. Just because, the aftermarket is growing and it accounts for US$25 billion itself. This market has the potential to sell spare parts to 70% of all the national Vehicles in Operation (VIO). It includes light passenger vehicles, pickups, commercial and heavy duty. It is important to consider that more than 40% of these VIOs are in the central area of the country. This is why distributors and shops selling to the end consumers are mainly located in this area.
There is also a very dynamic and unexplored market for used vehicles imported at a lower price form the US. These cars are colloquially known as “chocolates” and represent 20% of VIO.
Heading to 2020, ARIDRA forecasts a growth of 22% in VIO. It means the great opportunity for the aftermarket. However, manufacturers will have to develop more e-commerce platforms to meet the demands of the aftermarket niche.
Image source : American Industries Group