One year after the entry into force of the Mexico, United States and Canada Treaty (T-MEC), the auto parts companies in the country are the first to reflect the benefits of the agreement.

The National Autoparts Industry, INA through its Director of Foreign Trade Alberto Bustamante indicated that Mexico is the great winner of the T-Mec because it takes advantage of the opportunities it has and still has growth possibilities in the immediate future.

Mexico's winning position as the fifth largest producer of auto parts, including engines and systems such as air conditioners, speaks of a healthy and dynamic industry.

It may be of interest: Fitch Ratings positively rates the state of Coahuila

The Director of INA pointed out that Coahuila is the main producer of auto parts with 17.1 percent of the total production value, followed by  Chihuahua with 12.4 percent. Guanajuato and  Nuevo León occupy the third and fourth positions with 11.1 and 10.9 percent, respectively.

Mexico ranks fifth as an exporter of auto parts in the world and first as a supplier to the United States, where it ships 82 percent of its production. Throughout this year, Mexican auto part production reported the largest value in history for the sector in history for a similar period, surpassing the levels it had prior to the pandemic by 2.9 percent, in addition to being the largest annual percentage increase in 10 years.

In the first four months of 2021, Mexico reported an export value of auto parts to the United States of 8,859 million dollars, 27.5 percent higher than that reported in the same period last year.

Between January and April 2021, the value of exports of the Mexican automotive industry totaled 37 thousand 45.6 million dollars, of which 23.9 percent corresponds to the export of auto parts to the United States, the largest participation since 2017.

Another note of interest: Saltillo with sustained growth in industrial demand

The sector's exports registered a historical record value, which benefited firms such as Vasconia and Grupo Industrial Saltillo, with its subsidiary Draxton.

Grupo Vasconia plans to triple its capacity to produce flat aluminum, which it will sell to the North American automotive sector. For its part, Draxon as a result of a greater demand for regional content, could carry out an expansion of production capacity in Mexico to take advantage of opportunities in vehicle components, especially for brakes.

Experts acknowledge that the problem of US tariffs with China will favor the replacement of these auto parts from Mexico, with recovery projections in the next 3 or 4 years.

With the T-MEC there will be a total global increase of 10 percent in the production of auto parts, in a time horizon of 6 to 7 years.

Consult Solili for the Industrial Real Estate Report for 2Q 2021

Original note