Back in November 2016, Mexico car sales set new records by increasing by 23%. However, recent figures show that this increase wasn’t to last. According to Mexican Automotive Industry Association (AMIA), the first seven months of 2019 saw new vehicle sales in Mexico down by 6.5% compared to the same period in 2018.
At the same time, Mexico’s automotive good exports are also experienced a decrease of 12.7% in total vehicle exports in August compared to the previous year. But what is causing these two crises and what does it mean for the automotive industry in Mexico?
Car Sales in Mexico
In July, Nissan was the best-selling brand in Mexico, which totalled over 20,000 cars leaving their showrooms. However, this number is down 13.5% compared to the same month statistics of the previous year.
Chevrolet sold over 16,000 cars in July which was a decrease of 5.8%, whilst Volkswagen saw a decrease of 7% with car sales of over 11,000. Toyota saw an increase of 14.1% with over 9,000 cars sold, and Kia also saw a raise in sales by 1.4% with over 7,000 cars sold.
Is there cause for concern?
Despite the decrease in the number of units sold, Mexico’s economy hasn’t been too badly affected in previous years. Many local media reports predict that the automotive market will make a comeback between 2020 and 2025.
Mexico’s Auto Production
Mexico is one of the biggest vehicle exporters in the world, however, manufacturers this year has exported significantly fewer cars. The auto production in the country is down by almost 1%, with 2.6 million units, but exports are up by 1.5%.
In August 2018, manufacturers shipped 322,779 vehicles, which is compared to 281,811 units in August 2019.
On the matter, AMIA President, Eduardo Solís Sánchez, said the decline is partly due to lower demand from the U.S., Canada, and Brazil, who all account for 90% of Mexican auto exports.
Nissan and Mazda indicated changes to their production lines, whilst other car manufacturers said that due to the decrease in demand for certain models, that they have made adjustments.
Several well-known car companies operate in Mexico, including Ford, Honda, Toyota, Fiat-Chrysler, BMW, GM, Kia, Mazda, Nissan, Volkswagen, and Audi.
Whilst most car manufacturers saw a decrease in exports, such as Mazda who saw the export volume fall by 66% in August this year, some car manufacturers have seen an increase. Such as Ford, who reported an increase of 24.5% in vehicle exports in August.
What might increase the auto production of vehicles in Mexico? Some people focus on the financial cost when buying a car. Mexicans often prefer buying a cheap sound system (for sometimes less than 600 Pesos) than buying a new car with integrated sound systems, because this is a way of reducing their overall costs.
Whilst some people choose a car based on the features that the car has to offer such as built-in satellite navigation system. So, one way to increase the auto production of vehicles might be to provide a larger range of cars with different features and prices. For example, dealerships might sell their cars at a basic rate and then increase the price depending on what features the buyer wants.
The Yucatan Times