Automotive industry in Mexico: New car sales fall 64.5% in April

According to the National Institute of Statistics and Geography (Inegi), in April 34,903 new cars were sold in Mexico, in other words, 64.5% less than the same period last year. In April 2019 98,346 vehicles were sold.

Sales of new cars in Mexico fell 64.5% in April: historic figure
Sales of new cars in Mexico fell 64.5% in April: historic figure

This fall represents the largest for the month of April since 1995. It is also the lowest sales volume recorded for the fourth month of the year since 1997.

The decrease was mainly due to the suspension of non-essential activities to prevent the spread of COVID-19, since as decreed by the Ministry of Health, automotive agencies are not considered "essential" to the country.

Meanwhile, according to figures from the Mexican Association of Automotive Industry (AMIA), only from March to April sales fell 60.1%,

As of March 16, almost 85% of the visits to the sales floors and 60% to the automotive maintenance shops collapsed. In that month, car sales had a drop of 25.5%, by selling 85,517 units, which marked the largest decline in sales for a March in 25 years, according to information from Inegi.

These contractions within the automotive industry in Mexico exacerbated the negative trend that was already present before the arrival of COVID-19 to Mexico. Since 2017 new car sales were following a deceleration trend. In that year the marketing of new vehicles fell 4.6%, in 2018, 7.1%, and in 2019, 7.7%.

All automotive firms with a presence in the country faced negative effects as a result of the pandemic. It should be mentioned that the above figures come from 21 companies affiliated with AMIA, Mitsubishi Motors, and Giant Motors Latin America.

The slight level of sales was led by the market leaders. Meanwhile, Japan's Nissan sold 6,919 units; the General Motors group, which manages the Chevrolet, GMC, Cadillac and Buick brands, sold 5,716 units; and Germany's Volkswagen registered 3,737 cars sold. Together, these companies represented 56.6% of total sales in April.

This decrease is only lower than the 28.9% drop recorded in the first four months of 2009, when the global financial crisis also hit the economy.

In Mexico, the fall will be even more drastic in May than in April, despite the effort of several brands to attract customers. Mexico is the sixth largest car producer in the world and the fourth-largest exporter, according to a study by BBVA.

At year's end, some 981,633 units could be sold in the country, a figure similar to that recorded during the 2009 crisis, although he warned that the drop could be even greater.

The automotive industry is one of the most important, since it represents 3% of the Gross Domestic Product (GDP) and generates 32% of total exports, according to data from a BBVA study "Automotive sector: challenges and opportunities".

The automotive industry in Mexico

In Mexico, the automotive sector has a high economic value, leaving about 3.6% of Gross Domestic Product (GDP) year after year. It keeps a level of competitiveness and quality comparable to China, India, South Korea or Brazil. In the plants installed in the north of the country, about 3.9 million cars are produced annually, thus placing it as the sixth-largest producer of vehicles in the world, just below Germany and above South Korea.

The states that are directly benefited by the generation of employment in this sector are Aguascalientes, Nuevo Leon, Morelos, Guanajuato, San Luis Potosi, Coahuila, Puebla, Sonora, State of Mexico, Jalisco and Baja California.

The companies installed under this heading are Hyundai Motor Company, Toyota Motor Corporation, Bayerische Motoren Werke AG (BMW), Mazda Motor Corporation, Fiat Chrysler Automobiles, Honda Motor Co. Ltd, Audi AG, Ford Motor Company, Volkswagen Aktiengesellschaft, General Motors Company, and Nissan Motor Company, Limited.

The 43 plants in Mexico generate about 530,000 direct and indirect jobs, which will be affected by the COVID-19, as well as exports, which are predominantly to the United States and Canada.