BMW expects a "clear signal" from AMLO to invest in Mexico

Alexander Wehr, president of BMW Mexico, added that the company is waiting for clear signs of where the public policies of the new government are headed and if they guarantee stability to invest and plan.

Automotive industry in Mexico. Photo: Pixabay
Automotive industry in Mexico. Photo: Pixabay

National and international businessmen have expressed a certain level of distrust regarding some decisions of the new government led by Andrés Manuel López Obrador.

Alexander Wehr, president of BMW Mexico, added that the company is waiting for clear signs of where the public policies of the new government are headed and if they guarantee stability to invest and plan.

"The most important thing is that in the strategy, projections and plans we make, not in the short term but in the medium and long term, we have robust premises in terms of how decisions are being made in a government, what are the priorities, the orientation towards abroad, how the budget is handled ".

Alexander Wehr, president of BMW Mexico and executive director of BMW for Latin America.

In an interview with Reuters, Wehr said that the German manufacturer of high-end cars and motorcycles is closely following the behavior of elements such as the sovereign rating and the sales of the automotive market, as these factors allow it to anticipate the behavior of the economy. local.

"The credit and debt that Mexico has and (...) several states, can make rating agencies change their estimate of a country (...) In the end, it also results in the credits we give with our financial and industry-wide financial to end consumers are increasing (their costs), "explained Wehr.

According to a note from El Financiero, the recent modification to the credit outlook of PEMEX by rating agency Standard & Poor's could affect investments in the past, as it described as "insufficient" the government's plan to support the state-owned oil company after Fitch did the same thing weeks ago.

In response, Lopez Obrador said that the rating agencies "punish Mexico" for the neoliberal policy of their predecessors, which favored private initiative, but not the people.

At the moment, BMW is building a plant in San Luis Potosí, which will start operations in mid-2019 and will have a production capacity of up to 175,000 units per year, according to company information.


The automotive industry in Mexico starts 2019 with recovery

In addition to sales, the production and export of automobiles in Mexico also showed a positive performance. In relation to January of last year, total production increased by 9.85% and exports grew by 4.85%, according to figures reported by the AMIA (Mexican Association of the Automotive Industry).

Despite the rise recorded in the first month of the year in the production, export and automotive sales in the country, some automotive firms continue in the red.

The automotive sales ended with the negative streak that had registered in previous months, in January of 2019 the sales of light vehicles in the domestic market grew 1.78% in annual comparison. During the first month of the year, the industry sold 111,212 cars; Nissan continues to lead domestic sales.

The upturn in sales is explained by the significant growth of units sold by General Motors (106.9%), a figure that responds to an effect on the statistical registration of the brand in January last year.

In addition to sales, the production and export of automobiles in Mexico also showed a positive performance. In relation to January of last year, total production increased by 9.85% and exports grew by 4.85%, according to figures reported by the AMIA (Mexican Association of the Automotive Industry).

In the first month of 2019, there were 333,677 vehicles in the interior of the country and the export abroad amounted to 242,299 units. The American General Motors, which has Chevrolet, GMC, Buick, and Cadillac, led during this period the production and automotive exports.

Despite the positive result for the automotive industry on a national scale, some brands fail to recover in terms of their sales within the country. Nissan, the line that leads the Mexican market, once again recorded a drop in sales, compared to an annual this January sold 11.7% less.

The most pronounced fall was recorded by Smart (81.0%), followed by Alfa Romeo (46.2%), Audi (32.2%), Infiniti (30.7%), Lincoln (25.9%), Ford Motor (21.8%), Chrysler (17.0%), Volkswagen (12.5%), Fiat (5.0%), MINI and Toyota (3.3%) and Mercedes Benz (1.5%) .

Regarding the production of automobiles in Mexico, only four companies registered negative results. Mazda topped the list with a level of cars produced 63.4% lower than that registered in January last year. Nissan, Chrysler, and KIA registered falls of 9.9, 3.3 and 0.4% respectively in their production.

The effects on the production of these lines were reflected in their exports. The departures of Mazda vehicles decreased 53.8% in annual comparison, Chrysler's losses fell 43.5%, for Nissan the losses were 8.3% and for KIA 3.1%, according to what was reported by the AMIA.

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Mexico, the fourth global producer of auto parts in 2020, estimates INA

The National Autoparts Industry (INA) estimates that in 2020 the production of auto parts will reach a value of 100 billion dollars, which will place Mexico as the fourth manufacturer of this type of product worldwide.

This value of the production of automotive components will be similar to that of Germany.

The president of INA, Óscar Albín, commented that the geographical location of the country, the logistical costs and the commercial agreements that allow exporting to several countries, will continue playing an important role to attract new investments.

As an example, transporting a container from Mexico to New York takes five days, while in Los Angeles the process takes four days. Instead, doing it from China takes 32 days to New York and 18 days to Los Angeles.

"We have a logistical advantage against other important countries of international trade," he said.

The logistics cost of transporting a container from Monterrey to Chicago is $ 3,000 while doing it from Shanghai to Chicago costs $ 5,000.

The manufacturers of auto parts consider that Mexico will continue to be an important producer of vehicles, since China and the United States (EU), which have the first places, export a very low percentage of their production.

China is the leading car manufacturer in the world, but only exports 3% of its production. Meanwhile, Mexico exports 80% of the cars that leave the production lines.

This year, with the opening of the BMW and Toyota plants, Mexico's production capacity will be 5 million vehicles per year.

As for agreements, the Trans-Pacific Partnership and Progressive Trade Agreement (TPP-11) will allow vehicle and auto parts manufacturers to sell their products without tariffs to countries such as Australia, New Zealand and Malaysia.

"In the same way, if the US wants to sell a car to Brazil, it has to pay 35% tax. But if Mexico wants to sell a car to Brazil, it pays 0% tax if the conditions of regional content are met, "said Albín in the Automotive Logistics Mexico forum.

However, the country needs to improve its infrastructure, since it is currently in 51st place in logistics quality. The automotive industry has detected several bottlenecks in ports, customs, and rail transport that impede improving the logistics of the sector.

The president of INA also considers that Mexico should manufacture the vehicles that the world asks for, not those that the US market demands.

"We build the cars that the United States wants, but not the ones the world wants," he said. "Japan, Korea or Germany are strong because they produce what the world needs."

Last year Mexico exported 73 billion dollars in auto parts, 51 billion in vehicles and 11 billion dollars in tractors. In addition, direct foreign investment in the automotive sector during the last six years was 36 billion dollars.


Canadians call for a boycott of the Mexican auto industry: ask not to buy vehicles

The Canadian auto industry union promotes a boycott of General Motors, calling for not buying vehicles made in Mexico.

The union of workers in the auto industry in Canada on Friday asked Canadians and Americans to stop buying General Motors vehicles made in Mexico.

The Unifor union called for a boycott of trucks and vans with identification numbers beginning with number 3, which indicates that they were manufactured in Mexico. Unifor said it will promote the boycott through television, newspapers and large posters.

GM announced in November a plan to close a factory in Oshawa, near Toronto, which will eliminate 2,600 union jobs.

It also has plans to close four factories in the United States but negotiating with the UAW union.

The closures are part of a major restructuring with the elimination of 14,000 plant and employee jobs as GM concentrates its capital expenditure on autonomous and electric vehicles.

GM says it has too many car factories at a time when the market is turning to SUV trucks and SUVs and that the boycott could hurt the economy of the Canadian province of Ontario.

Unifor President Jerry Dias said that in the 2016 contract negotiations, GM agreed to keep the Oshawa plant open for the duration of the contract, until 2020. He wants the company to return to the negotiating table to keep the plant open permanently.

Dias accused GM of closing Oshawa and plants in the United States while raising production in Mexico, where workers charge, he said, two dollars per hour. He said the company manufactures more than 600,000 vehicles per year in Mexico.

"We ask them to resist 'Greedy Motors'," he told a news conference.

So far the UAW union has not joined the request of the Canadian union.

Since the announcement, GM has faced strong criticism from President Donald Trump, legislators from affected states and the UAW. Trump has concentrated on a plant in Lordstown, Ohio, which is scheduled to stop making compact cars on March 1. The president has promised to bring jobs back to Ohio, a crucial state for his reelection in 2020.

GM manufactures the Chevrolet Equinox and GMC Terrain SUVs in Mexico, as well as GMC and Chevrolet trucks and the hatchback version of the compact Chevrolet Cruze.


Santander and Suzuki sign automotive credit alliance

Banco Santander Mexico and Suzuki Motor of Mexico announced on Tuesday that they will integrate an alliance in which the bank will be the main financial arm of this Japanese automaker, both for financing cars and dealers.

This agreement is based on the advantages of "Super auto Santander", the automotive credit that a few months after its launch, has been highlighted by its entirely digital platform for self-management of loans and automated processes that facilitate quotation and origination of credit online 24/7.

The objective in terms of car credits of this alliance is to reach 15 thousand units during 2019, seeking Santander to reach a 50 percent share of the total estimated sales of Suzuki in the country.

In addition to providing financing for Suzuki customers for the acquisition of cars in dealerships throughout the country (individuals, PFAE and legal entities), the alliance also includes the "floor plan" which is the credit to the concessionaires to finance the inventory of new, semi-new vehicles and others.

The executive director of Crédito Automotriz de Santander, Julio Ascorve, stressed that with this alliance "we take a notable step in the consolidation of our automotive financing business, and in the bank's strategy of focusing on customers, in addition to allowing us a linkage to other businesses such as attention to automotive dealerships, SMEs and Suzuki Motor of Mexico ".

For his part, the Commercial Director of Suzuki Motor Mexico, David Hernandez, pointed out that "based on the results of the last two years, our public offer has grown significantly, and we know that the only way to continue growing is through credit, that makes it easier for the general public to buy our cars. Therefore, we looked for a commercial partner that could reinforce the inventory capacity of our dealers, and consequently, put more units at the disposal of the final public. We are sure that Santander is the partner we were looking for for this purpose. We trust that the partnership will last for the benefit of commercial management. "

Suzuki has achieved in Mexico to exceed the sales of the industry in segments such as the SUV, wherein 2018 achieved an increase of 6 percent in sales, compared to 2 percent of the industry; while in subcompacts, the Japanese brand grew 53.4 percent, while the market decreased 11.6 percent.

Since its launch, "Súper auto Santander" has taken advantage of the bank's experience in other countries with this product that has important differentiators compared to the current offer in the market, and to date, it has allowed the bank to have alliances for other vehicle brands as well as for high-end motorcycles.


Nissan initiates layoffs in Mexico in the middle of a storm in the automotive market

In the US the demand for SUVs has surpassed the Sedan and in recent years Mexico has helped Nissan cover part of that demand.

Why it is important? The automotive industry is changing, Mexico has had two years with drops in domestic sales and in the US the Sedan market is dying rapidly.

What happened? Nissan Mexico began laying off 1,000 workers at its two Aguascalientes plants and one more in Cuernavaca, Morelos, to "readjust production volumes," according to Brian Brockman, corporate communications director.

The state of things: Beyond the generation of autonomous cars, the US market, one of the largest in the purchase of cars is changing, as of 2016 they are buying more SUVs (6.9 million) than Sedáns (6.7) million) according to the consultancy LMC Automotive, a specialist in the automotive market.

In 2018 sales of 8 million SUVs exceeded by 50.94% that of Sedans and it is expected that by 2025 only one sedan will be sold for every 3 SUVs.

The figures speak: After reaching a ceiling of 848 thousand 88 units produced in 2016, Nissan Mexico decreased its production volume by 10.10% according to the final figures of 2018.

However, the production of SUVs in Mexican factories grew 138% between 2016 and 2018 and the export of these by 148%.

In the same period, the share of exports in relation to the country's production rose 6.10 points to 65.10% from 59%.

In 2018, 70% of the SUVs exported by Mexico were destined for the United States, according to Inegi data.

What is going on?: In May, the Japanese automaker announced that it would reduce its production of vehicles in North America by 20% due to a drop in profits in the United States. And in December, when it announced its dismissal plan, which was attributed the decision to a "loss suffered within the Mexican auto industry" driven by the increase in raw material costs.

What's Next? The way in which Nissan will restructure its production volume is unknown, however, with the increase of production of SUVs and especially of the exports of these to the US, a part of the manufacturing could be taken to its US plants and avoid part of the tariffs that President Donald Trump maintains on Mexico.


The automotive sector in Mexico stagnated in 2018

During 2018 the automotive industry produced 3,908,139 automobiles, which represented a fall of 0.61%, compared to that produced in 2017, of 3,932,119 units, reported the National Institute of Statistics and Geography (Inegi).

According to the administrative records of 21 companies affiliated to the Mexican Association of the Automotive Industry (AMIA), the assembly companies with the main setbacks were Honda, with a production of 147,158 vehicles, a fall of 29.5% compared to 2017; followed by Ford Motors that fell by 11.1%, when joining 280,499 units, while Nissan had a fall of 8.1%, with a production of 762,408 cars and Volkswagen produced 435,373 units, at -5.6% per year.

While the main increases in production were observed in the Korean KIA, which assembled 294,600 cars, a rise of 33%, compared to 221,500 units in 2017. To the good performance of KIA Toyota joined, with a production record of 191,978 units, which represented a growth of 27.1%, compared to 151,062 vehicles in 2017.

Also, Audi, General Motors, Mazda and the Fiat Chrysler Automobiles Mexico (FCA) group, had an increase in their production lines. On the side of exports, it should be noted that the renegotiation of the North American Free Trade Agreement (T-MEC) did not affect shipments abroad, which is 80% goes to the US market.

According to the Inegi data, exports increased by 6.0%, since during 2018 3,449,201 new vehicles were sold abroad, higher than the 3,253,859 units exported in 2017.

Asian companies installed in Mexico had the best export reports, KIA said with a 41.5% increase, sending 231,695 units abroad, followed by Toyota in an increase of 26.6%, 187,569 exported vehicles and Nissan in a hike of 5.8%, 496,333 units.

Exporters. The Asian companies installed in Mexico had the best export reports. KIA stood out with an annual increase of 41.5%.