Mexico’s auto parts sector could grow by 5.8% this year

MEXICO - This year, the growth of the auto parts sector's Gross Domestic Product (GDP) could be more than double that of the Mexican economy.

Specialists consulted by the Bank of Mexico (Banxico) estimate that the country's GDP will grow by 2.5% this year.

According to Engen Capital, the auto parts sector could increase by 5.8%, to a value of US$26 billion.

"This increase is explained by the recovery of vehicle sales, after the most complicated moments of the pandemic saw constant decreases," said Oscar Silva, partner at Roland Berger Mexico and expert in industrial management for the automotive sector.

In addition, nearshoring reflects a positive episode, since companies that are about to arrive or have already arrived require local suppliers.

"We are just seeing the first part of the nearshoring wave, the first companies are arriving, but many more are analyzing the possibility of coming; we do believe that it will begin to be reflected in the numbers," Silva said.

According to Roland Berger Mexico, 24 percent of companies looking to relocate to Mexico have already done so and 27 percent are planning to do so.

"Therefore, it is expected that in the next three to five years, investments and production in the auto parts sector could increase," said Silva.

He pointed out that the industry is in the process of recovery and will continue to be dynamic in the coming years, thus opening up an opportunity to replace imports.

He pointed out that the industry is in the process of recovery and will continue to be dynamic in the coming years, thus opening up an opportunity to replace imports.

"The auto parts sector will represent 7.9 percent of total manufacturing GDP this year," said Engen Capital.