Regional content in NAFTA-bound auto exports may rise just by 2.5%, says analyst

Regional content in North American automotive exports may rise by as much as 2.5% points, said Luis de la Calle, CEO of consulting group De la Calle, Madrazo and Mancera, at the forum “In time of uncertainty the challenge is reinvention” in Mexico City, reported El Universal.

De la Calle explained that it is the most minimum content can be increased because it is the percentage of production cost that can be absorbed. If rules of origin rise minimum content above that margin most companies will prefer to export from outside the NAFTA region, and to do it through the tariff of Most Favored Nation of the World Trade Organization (WTO).

The maximum you could increase the cost of production on average in the region is 2.5%, because if you raise more you start to export by tariff of the WTO. The cars that are exported from Canada and the United States have 71% of North American content that is very high, so even if you can increase the content, you run the risk of losing competitiveness, he said.


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