During the patriotic month, Mexico celebrates its strength in the automotive industry, with 2.65 million light vehicles produced and more than 7.8 billion dollars in automotive investments during the first half of 2024.

The Mexican automotive industry is dressed up. We are not only celebrating Mexico's independence, but also the strength of a sector that has consolidated the country as the seventh largest producer of light vehicles in the world and the main commercial partner of the United States. Taking advantage of the dates, let's review the automotive achievements that make us feel proud to be Mexican.

AUTOMOTIVE PRODUCTION AND INVESTMENT IS ON THE RISE

We begin by celebrating that, in August 2024, the Mexican automotive industry achieved extremely positive results. Light vehicle production reached 352,615 units, an increase of 8.3% compared to the same month of the previous year. This is not the only encouraging data: from January to August, cumulative production amounted to 2,651,060 units, an increase of 5.33% compared to the same period in 2023. This performance marks the best level of production since 2019, before the pandemic. If this trend continues, production of 4.1 million light vehicles is projected by the end of 2024.

At the state level, Directorio Automotriz's predictions indicate that, by the end of 2024, Guanajuato would produce the impressive number of 916 thousand light vehicles. This is a milestone that consolidates Guanajuato as the leading vehicle producer in all of Mexico, but this entity is not the only one with a potential of close to one million units per year. Aguascalientes is in second place nationally with a capacity for 849 thousand units per year, Coahuila has a maximum of 766 thousand and Puebla follows in fourth place with a capacity for 725 thousand units. Without a doubt, Mexico is a good place for light vehicles to be born.

Now, regarding investments in Mexico, in the first half of 2024, the country accumulated automotive investments for 7,802.31 million dollars. Of these, 64.6% corresponds to projects of Tier 1 and 2 auto parts companies, while 8.1% is related to OEMs. Companies providing automotive services and products contributed 9.1%, and 6.4% was allocated to both industrial parks and raw materials companies. 3.6% of the investments were directed to development and engineering centers for the sector, that is, every vehicle produced in North America has a part made in Mexico.

MEXICO, CHAMPION IN AUTO PARTS

Mexico is the main supplier of auto parts to the United States, with a 43% share, which helps it consolidate its position as the fourth global producer of auto parts, only behind Japan. However, in the coming years, Mexico will rise to the podium, taking the bronze from the country of the rising sun, thanks to the participation of the 5 states that produce the most auto parts in Mexico, which are Coahuila (14.7%), Guanajuato (13.8%), Nuevo León (12.8%), Chihuahua (8.7%) and Querétaro (8.0%).

In this regard, it is worth applauding that, according to information from the National Auto Parts Industry (INA), Foreign Direct Investment in the sector reached 1,634 million dollars in the first half of 2024, while the production of auto parts has also grown by 6.57%, reaching 63,336 million dollars in the first half of 2024, and is expected to close the year with a total of 126,149 million dollars, marking a growth of 4.12%.

In addition, in an exclusive interview with Cluster Industrial, Francisco González, President of INA, reported that the investment outlook in the auto parts sector in Mexico still has an estimated investment of 2.2 billion dollars for 2024, where Asian countries such as India, Taiwan and China have strong investment plans to exploit software, electronics and electrical supply.

CHINESE SHIPPING COMPANIES AND THEIR FERVOR FOR MEXICO

China's interest in the Mexican market continues to grow, reflected in a 52% growth in automotive investments during the first half of 2024. This trend is reflected in the intentions of Chinese automakers to set up in Mexico. BYD continues with its plans to build a plant in the country and Stella Li, BYD's regional head for the Americas, has stated that the new plant will be dedicated exclusively to the Mexican market. It should be noted that a BYD plant in Mexico would produce around 150,000 units per year initially, a "medium" figure, but more than enough for the national and Latin American markets.

Along the same lines, Diana Rodriguez, Marketing and Communications Director of Chirey Mexico, mentioned in an interview with Cluster Industrial that the automaker plans to produce and assemble vehicles in Mexico in the medium term, taking advantage of its strategic position to boost its expansion into other Latin American markets. Although a date or location for the plant has not yet been set, Mexico is seen as a key place to develop its business plan. Similarly, Leo Chen, Vice President of NETA Auto, also noted in an interview that Mexico will be one of the brand's main markets in America due to the presence of almost all OEMs and its favorable climate for electric vehicles, thus consolidating its interest in the country as an ideal platform for the growth of both brands.

Also as of the date of this article, MG Motor remains the leading Chinese brand in sales in the country, with a cumulative total of 33,000 units sold from January to August. Chirey Motor has the achievement of having sold 18,813 units in the country, including the Omoda sub-brand, while JAC sold 15,961 units so far this year, and Great Wall Motor reported a total of 9,126 units sold.

MEXICO, FERTILE GROUND FOR ELECTROMOBILITY

What do these Chinese automakers have in common? Their commitment to electromobility, finding in Mexico an ideal home to respond to a clear trend. According to data from Directorio Automotriz, from January to May 2024, there have been 35 new investments related to electromobility, which together represent 4,538 million dollars of investment in Mexico. In addition, the business intelligence area of Directorio Automotriz projects that announcements related to electromobility projects will exceed 6,000 million dollars in 2024, which would indicate a growth of 10% compared to what was recorded in 2023.

It is important to note that, in Mexico, according to the Electromobility Barometer of Mexico, a report prepared by the Electro Mobility Association (EMA), the charging infrastructure for electric vehicles in the country increased by 23% in the second quarter of the year, reaching 39,257 positions. This increase reflects a significant advance in the adoption of electric mobility in Mexico.

Now, how many 100% electric cars has Mexico produced in 2024? The answer is 125,295 units from January to August. According to the analysis of Cluster Industrial and Directorio Automotriz, the projection at the end of the year could exceed 185 thousand units, a record considering that in 2023, 109,695 units were produced. That is, in 2024 alone, the production of EVs in Mexico could grow by 69%, and from 2020 to date, more than 430 thousand electric vehicles would have been produced in the country.

T-MEC, AN AGREEMENT THAT WILL CONTINUE TO WIN FOR MEXICO

Everyone wants to be Mexican, because the country, thanks to its 14 trade agreements, its geographical position, its highly developed workforce and technological vision, allows the opening and growth of other nations that in turn drive Mexico. To mention, during the previous Free Trade Agreement between Mexico, the United States and Canada, Mexico attracted a Foreign Direct Investment of 83,883 million dollars. Now, in recent years, the renegotiation of the Mexico, United States, Canada Agreement (T-MEC) has triggered the so-called Nearshoring that puts Mexico in the sights of European and Asian countries.

The USMCA remains a fundamental pillar for the growth of the Mexican automotive sector and the next review of the agreement in 2026 will be crucial to define the future of the industry in the region. Despite political tensions, experts such as Francisco González, President of the INA, are confident that the treaty will be maintained. Donald Trump said at the time that he considers it a good treaty, and in the case of Kamala Harris there is also support for the treaty. Although there are points to be developed regarding the relationship between China and the United States, we know that Mexico will be a champion that will keep both countries on its side.

LET'S CELEBRATE THE MEXICAN AUTOMOTIVE INDUSTRY

Mexico is a key player in the global automotive landscape. Its ability to attract investment, its role as a leader in the production of light vehicles and auto parts, as well as its strong relations with the two world powers, consolidate it as the automotive heart of Latin America and a strategic partner in the North American region. For this and much more, long live Mexico, long live its automotive industry and long live the Mexicans who make it possible!

Industrial Cluster. National Pride: Mexico, a world leader in the automotive industry