News, Insights and Best Practices for Manufacturing in Mexico

Mexico Continues to Dominate the Auto Industry

   
20 Aug 2014

Category: Automotive Manufacturing, Politics & Regulations

Mexico's expansion may be catching the eye of countries as diverse as Russia and New Zealand. One area of growth is in the auto industry, where Mexico has become the fourth largest automotive manufacturer in the world. This expansion is due in part to the tremendous expansion of the North American gas and oil industry, along with Mexico's decision to open its doors to foreign energy investors.

Mexico Grows Interested in Forming Connections with Russia

Mexican exports may reach as far as Russia, according to ITAR TASS. Recently, the Mexican ambassador to Russia, Ruben Beltran, spoke to Mexico's position as a leading exporter not only of meats and produce, but also of technology and manufactured goods.

"Mexico's economic potential is in exports. Mexico is one of the world's largest exporters of pork and beef," said Beltran. "We should not forget that manufactured goods form the basis of Mexican exports. Mexico is no longer a country where most exports are oil and farm produce. Today, manufactured goods account for 80 percent of exports."

Mexico plans to take advantage of Russia's decision to ban imports of U.S. and European goods if Russia proves to be a willing partner. This is part of Mexico's goal of expanding around the world.

Mexican Automotive Industry a Major Part of its National Growth Strategy

One manufacturing segment where Mexico could begin exporting goods to Russia is the automotive sector. The automotive industry in Mexico is growing at a fast clip. According to Forbes, it's the fourth largest manufacturer of cars in the word. U.S. companies like Chrysler have moved there to take advantage of the inexpensive but efficient and well-trained labor, along with the many trade agreements existing around the world. These agreements enable companies to ship parts or even entire cars across the three North American countries without paying tariffs because of the North American Free Trade Agreement (NAFTA).  Foreign companies like Audi, Nissan and BMW are in Mexico, which has made the country a global hub for OEMs and suppliers alike. Access to the North American market is also a deciding factor for companies moving to Mexico. 

Learn more about NAFTA other Mexican Free Trade Agreements here!

This industry benefits the U.S. because companies have begun performing what has been called an integrated production. Because of NAFTA, companies can participate in a two-way trade where some parts will be made in the U.S. and some parts in Mexico, and then finish assembling the car wherever it will be sold. About 40% of the goods produced in Mexio come from the U.S. and are exported around the world. 

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Mexico has a long history of automotive manufacturing stretching back to when the 1920's when the first U.S. companies moved their production there. Mexican officials welcome foreign business, and have created schools and training programs to help Mexican automotive experts become better at working on a wide range of vehicles, both foreign and domestic.

The Benefits of Opening up the Oil Industry

Much of Mexico's recent growth has to do with the country's decision to open its energy sector to foreign companies, which began late 2016. Foreign Affairs calls this energy reform revolutionary.

Not least of the revolution was Mexican President Enrique Peña Nieto's ability to get many of the country's lawmakers to agree despite being of different political parties. This reform may allow Mexico to continue its expansionary policies that are allowing the country to grow its manufacturing and export industries.

Support from the global market, a history of automotive manufacturing, and benefits from a globalizing energy reform support automotive manufacturing in Mexico. The industry's expansion into the manufacturing future is taking Mexico to another level of operation efficiency. 

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