Electric and Chinese cars detonate auto parts made in Mexico

MEXICO - The automotive sector is experiencing a golden age that, according to various projections, will continue at least until 2030. During this period, the auto parts sector is also expected to grow steadily.

“Auto parts alone receive more than 30% of the total Foreign Direct Investment coming into the Mexican automotive market. It is an opportunity to boost SMEs in the sector and accelerate their development,” says Carlos González, CEO of Hultek, a company specializing in the supply of rubber parts for different industries.

In the last three years, Hultek's catalog has grown significantly for the automotive industry, due to the great demand from car assembly plants in both Mexico and the United States.

The auto parts sector anticipates that this year FDI will be US$2.3 billion, up from US$2.1 billion in 2023.

However, projections such as Engen Capital's point out that FDI in auto parts could exceed US$8 billion by the close of 2030.

“To reach those figures we need the industry in Mexico to mature in an accelerated manner: the automation processes in the plants and the certifications required to be a supplier to the sector to be integrated as soon as possible,” explains Gonzalez.

The Hultek specialist points out that both automation and certifications will be challenges for more than 70 and 85 percent of SMEs, respectively.

Commenting on whether this is an achievable goal, Gonzalez is confident that there is enough of a market to be able to triple FDI in the coming years.

On the other hand, Gonzalez points out, it will be important to see the development of Chinese carmakers in the country. Currently, only JAC Motor assembles cars in Mexico, while other firms, such as BYD and Chirey, have expressed their intention to have production lines in Mexico.

“The arrival of Tesla will also bring Chinese suppliers to Mexico, so it will be essential for local suppliers and SMEs to promote the development of Mexican plants in order not to miss this great opportunity to attract new customers,” Gonzalez acknowledged.

Given the increase in sales of electric vehicles and Chinese firms, Hultek also anticipates that the aftermarket will be important to develop in the country, even if the cars are not assembled in Mexico.