Mexico’s auto production will stagnate by 2020, IHS Markit predicts

1 August, 2018

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Mexico's manufacturing industry will reach its peak production by 2019, with 4.2 million units, and will stagnate by around 4 million from 2020. This will put the country in harmony with the rest of North America, one of the few regions where the industry automotive is contracting.

This is the forecast that the senior manager of Sales of Light Vehicles in America, Guido Vildozo, of the consultancy firm IHS Markit, made during the Mexico Outlook 2018 seminar, hosted by the Anahuac University, as reported by Mexican media.

“This year, automotive production in Mexico will be around 4.1 million units and will remain so for the next two or three years due to the fact that some popular models will no longer be manufactured in the country, such is the case of the RAM pickup in Saltillo,” Vildozo said.

The expert said there’s reason for alarm in the Mexican automotive industry, because of the increase in demand for crossovers to the detriment of passenger vehicles. “This is cause for alarm for Mexico because the investment between 2011 and 2016 was focused on passenger cars, which is the most contracted segment,” he said.

IHS foresees an industry growth, mainly in China and South Asia, including India, as well as Latin America, while North America, Japan and Europe are slowing down, with the exception of the eastern zone.

In the United States, the expectation is that automotive production will also be reduced by one million units, he said, since sales will be lower in 2018 by approximately 600,000 vehicles.

The U.S. market will be impacted by the imposition of tariffs on steel and aluminum, which will increase the price of vehicles and, consequently, sales will be affected.

In 2017, it estimated that between 4.6 and 4.8 million cars could be manufactured in the country, but these changes in the production lines of the automakers will affect the performance of the industry.

Therefore, Vildozo suggested that Mexico must “diversify its cards” because it is currently “focused on a market that will not grow,” in reference to the U.S. sedan market.

For Mexico to reach the production of 5 million vehicles in 2020, as expected by the automotive industry, it will be necessary for the new government of the virtual president-elect, Andres Manuel Lopez Obrador, to develop a policy that promotes investment in the manufacture of hybrid vehicles and light trucks, so that goal is achieved by 2022 or 2023.

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