The belated awakening of Mexico’s new-vehicle marketplace is a big deal. It’s good news all around, something that ought to put smiles on the faces of everybody in the global auto industry, writes editor Jesse Snyder in Automotive News.
Certainly the biggest smiles are in Mexico — new-vehicle owners, automakers, suppliers and dealers — after 2015 sales there jumped 19 percent to 1.35 million and finally broke the record set in 2006.
But the recovery in Mexico’s sales is ultimately also good for auto industry employees in the U.S., Canada and elsewhere.
For the past decade, Mexico has been out of balance when it came to automobiles. On the production side, it’s been great. Light-vehicle manufacturing has boomed. Between 2005 and last year, output more than doubled to 3.5 million vehicles as several automakers expanded capacity or opened assembly plants.
Mexico built itself into an auto export machine, founded on not just low labor costs and geography, but also the Mexican government’s pursuit of favorable trading pacts with dozens of other countries to supplement tariff-free access to the U.S. and Canada through the North American Free Trade Agreement.
But over the same period, sometimes labeled as a lost decade, the Mexican domestic auto market has been as dry as the Sonoran Desert. New-car volume was swamped by a flood of U.S. used cars after a 2005 legal change opened Mexico’s northern border.
From a peak of 1.5 million used-car imports in 2006, the flow fell below 200,000 last year, and Mexican new-vehicles sales are jumping.
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