Imported Used Heavy Trucks Hurts Mexican Market

MEXICONOW Staff Report

There have been some huge gains made in the production of heavy trucks and buses. In the first five months of 2015, exports totaled 71,808 units, up a whopping 50% over the same period last year.
The growth continued through the rest of the year and the National Association of Bus, Truck and Tractor Manufacturers (ANPACT) predicted exports would reach 170,000 units for the year.
Strong demand for heavy vehicles in the U.S., where 83% of Mexico’s production goes, was responsible for the growth. ANPACT President Miguel Elizalde said Mexico’s free trade agreements had also benefited the industry by opening new markets.
Speaking to MexicoNow at the Mexico’s Automotive Industry Summit in Leon, Guanajuato recently, Mr. Elizalde said: “Twenty years ago, 1,000 heavy vehicles were exported per year. Today we are exporting more than 120,000 a year and this year, 2015, we will break the export record.”
Mexico’s share of North American production has risen from 17% 10 years ago to 35% today. Tractor-trucks dominate the production and export numbers, putting the country a close second place behind Germany in world production. There is a difference of fewer than 2,000 units between them.
That, said Mr.Elizalde, “Speaks to the quality of the Mexican products, all of which comply with all the strictest security and environmental regulations.”
There are nine bus and truck manufacturing plants in Mexico, six of which are dedicated to export, sending their vehicles to Canada, Peru, Chile, Ecuador, Guatemala, Costa Rica and Panama in addition to the U.S.
The only sour note for the industry is the domestic market, which remains in the doldrums due to competition from used U.S. imports and lack of accessibility to financing by small business in Mexico, said Mr. Elizalde.
In July 2015, domestic sales totaled 3,127 units, about the same number as July 2014. Annual sales today are 30% below what they were in 2007.
Mr. Elizade said: “We are an industry of contrasts. We broke our export and production records in 2014 and will do the same again for 2015. We will increase exports by around 30%, which in turn will push production up by 20%. We may well close 2015 with 194,000 vehicles produced and around 154,000 vehicles being exported.
“Around 95% of our exports go to the United States while the rest head to Chile, Peru and Ecuador and we think there will be a lot of opportunity to increase our exports to Colombia in the coming years.”

“As for the internal market, we might close this year with a figure of 36,000 heavy duty vehicles sold internally. Our best ever year so far was 2007 when we 51,000 heavy duty vehicles, so we are more than 30 per cent below our best year so far. As I said, we are an industry of contrasts between what is happening internally in Mexico and what is happening with exports and production.”
“Mexico is the seventh largest heavy vehicle manufacturer in the world and the fourth largest exporter of heavy duty vehicles and we are the second largest exporter of tractor trailers in the world although by value, we are the largest exporter of tractor trailers in the world.”
“We are a very robust industry and our vision for the next 15 years, to the year 2030, is that we will reach 300,000 units produced which would put us at first place in the Americas. That is the vision we will seek to achieve.”
“But we have two main concerns. One of them is the internal market; we had a scrapping program that in 2014 destroyed more than 7,000 heavy trucks in exchange for new ones with government incentives, but the new scrapping program is not working. If we can increase the scrapping program, that will help the internal market.”
“The other major concern is the importing of used heavy trucks, even though they have been reduced by up to 60 per cent. For every 10 new trucks being sold, there are six more used vehicles being imported from the United States.”
Other auto industry figures agree with Mr. Elizalde and point out that poor regulation and lack of oversight is responsible for the continued importation of substandard used vehicles, which is negatively impacting growth and job creation in the domestic market, while being detrimental to the health and safety of Mexican citizens.
Official certification must be required of all imported vehicles to ensure they meet minimum requirements for physical condition and emissions, and are of legal origin, he said.
Enforcing such regulations will require heavy input from the Federal Government, he said. Unfortunately, at present, unregulated importations continue with impunity.
“Every imported used truck that enters our national territory means one less job,” he said.
Thanks to new regulations brought in to effect in 2014 sales of used heavy vehicles went down 6% over the same period. However, the industry representatives claim that the authorities are not doing enough to enforce the new laws.
He said the lack of regulations was also impacting road safety and competitiveness.
“If we all agree that Mexico needs better roads, I don’t see why we shouldn’t have better trucks. Our domestic market, employment and security depend on it,” he said.