The path for car sales in Mexico's automotive industry gets complicated in 2020

The path that will follow the sale of cars in Mexico for this year looks complicated and will not reverse the automotive industry downward trend in the short and medium-term.

The amount of exports has increased despite the decline in foreign sales volume, thanks to an increase in the added value of the product sold by Mexico, according to the Mexican Association of the Automotive Industry (AMIA). Photo: Pxfuel
The amount of exports has increased despite the decline in foreign sales volume, thanks to an increase in the added value of the product sold by Mexico, according to the Mexican Association of the Automotive Industry (AMIA). Photo: Pxfuel

Factors such as a slower pace of formal employment generation, the fall in consumer confidence, economic stagnation and accumulation of inventories, will continue to slow the movement of cars in the domestic market.

Only in 2019, there was a drop of 7.6% in the number of light vehicles sold compared to the previous year and is at its lowest point in five years.

With this, there are three years of losses in the sector, according to data published by the Inegi.

In addition, the production and export of these units, closed 2019 with falls of 4.14 and 3.35%, respectively compared to 2018.

There will hardly be a breakpoint in 2020 that will reverse the situation of the industry. There is nothing to indicate that this year will be different from previous years

Meanwhile, Alejandra Vargas, an industrial sector analyst at Banco Ve por Más, said via email that globally the automotive industry suffered a slowdown in sales and a change in the trend of reducing carbon dioxide emissions.

"Domestically there has been a stronger economic slowdown than estimated with an increase in used vehicle imports".

In the same sense, Raymundo Tenorio, director of the economics courses at the Tec de Monterrey Campus Santa Fe Business School, shared that other factors for the fall were the dismissal of sales agents, the fall in credit and the accumulation of inventories.

Minimum benefit for the sector

This year it is expected that the Bank of Mexico will cut its reference interest rate to 6.50% at the end of the year, from its current level of 7.25%, according to the survey conducted by Citibanamex. However, the effects would be minimal for those who want to buy a car.

"A modest recovery would be expected thanks to this factor, since it could encourage credit for a lower financial cost. It is important to note that financing rates to this sector are higher than the reference rate that was, so financing rates could be above double digits," said Vargas.

On the other hand, with inflation falling and a rise in workers' wages promoted by the federal government, consumer confidence would be revived, although the effect would take time to be reflected

A separate issue is the possibility of increased sales of electric cars due to new generational trends.

TOP 20: BEST SELLING CARS IN MEXICO IN 2019

2019 was a difficult year for the automotive industry in Mexico as political and economic changes caused severe losses. Here are the 20 most sold cars in the country

For the automotive industry in Mexico, 2019 was difficult as political and economic changes affected and as a consequence had a 7.7 percent decrease in sales becoming the largest economic crisis after 2009.

In the ranking of the most sold brands were: Nissan, General Motors and Volkswagen, although they report lower sales than in 2018. The least sold were: Alfa Romeo, Infiniti and Fiat, and Smart.

The firms that grew were: JAC, BAIC, and Bentley, those that maintained their numbers were: Renault, Suzuki, Volvo, Peugeot, and Mitsubishi.

Here is the list of the most sold brands in Mexico:

Nissan Versa with 88,707 units sold

Chevrolet Aveo with 70,947 units

Nissan NP300 with 62,989 units

Nissan March with 49,493 units

Volkswagen Vento with 47,179 units

Chevrolet Beat Notchback with 45,399 units

KIA Rio Sedan with 26,132 units

Chevrolet Beat with 24,715 units

Nissan Sentra with 21,904

Volkswagen Jetta MK7 with 20,469 units

Honda CR-V with 19,069 units

Nissan Kicks with 17,837 units

KIA Forte Sedan with 17,712 units

Toyota Hilux with 17,654 units

Honda HR-V with 17,175 units

KIA Sportage with 15,876

Chevrolet Trax with 15,250 units

Ford Figo Sedan with 14,663 units

Mazda 3 Sedan with 14,553 units

Volkswagen Tiguan with 14,548 units

By Mexicanist