Mexico is heading to supply 50% of US auto parts purchases: INA

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As of the third quarter of the year, Mexico has expanded its advantage as the leading supplier of automotive components to the neighboring market, supplying 43% of the US needs, a gain of 3.7 points compared to the level at the end of 2022.

Mexico not only became the main supplier of auto parts for the United States, but continues to gain market share, supplying 43% of the total purchases made by that country to the world until the third quarter of 2023, highlighted the National Industry of Auto Parts (INA).

Armando Cortés, director of the INA, explained, under this growth trend, “50% of the United States market share will be reached in the short term.”

He added that “when we compare ourselves with other countries, we see that Canada is the next supplier to the United States, but it is very far from Mexico (with a share of 10.68%), as is China (7.70 percent).”

The Mexican industry sent parts and components worth 69,104 million dollars from January to September 2023, equivalent to 87% of its exports.

The trend that continues to consolidate is that of Mexico as the main supplier of auto parts to the United States,” said Armando Cortés.

The participation of the Mexican auto parts industry has increased 3.7 percentage points compared to the end of 2022, when it stood at 39.3% of imports made by the United States.

In contrast, he said, China lost presence as an auto parts supplier in the US market, with 1.46 percentage points, going from 9.16 points to 7.70 percentage points.

This means that Mexico exports nine times more in value of auto parts to the United States, compared to China.

Although Mexico has positioned itself as the main supplier of auto parts to the US market, in 2007 it captured 29.82% of the total purchases made by the United States; while China placed 20.44% in that year.

This means that Mexico has grown more than 13 percentage points from 2007 to date, and so far in 2023, it represents the most important growth in just one year, increasing 4.8 percentage points.

The director of the INA specified that nearshoring and the new regional content rules established by the T-MEC for the automotive sector have been triggering factors for the increase in Mexico’s participation in the United States market, which will continue to strengthen with the assembly of electric vehicles in North America.

Most of the production of auto parts is destined for exports, highlighting its gradual increase in recent years, since, in 2020, sales abroad represented 83% of production and by 2023, they grew 87%, with North America being the main one. destination of automotive parts manufactured in Mexico with more than 90% of its exports. That is, 87% to the United States and 3.5% to Canada, he indicated.

In the accumulated until last September, the auto parts industry accumulates a surplus trade balance of 28,052 million dollars, which is 14.04% higher than the same period in 2022.

This means that it has strengthened its local supply chain to stop importing from Asia and Europe, mainly, since several companies from these nations have begun to locate in our country.

Armando Cortés said that the auto parts sector has shown significant strength in production during the current year, since in 6 months of the first three quarters of the year a value greater than 10,000 million dollars was recorded, historical figures that the country has not yet achieved, so the forecast for 2024 appears positive.

Mexico has received around 10.25 billion dollars in FDI from 2019 to September of this year for the auto parts sector. The United States originated 42% of the total, followed by Japan with 19%, Germany with 16% and Canada with 7% of the investments.

Source: El Economista