Introduction
During the Global Transportation & Innovation Summit, automotive industry experts highlighted significant challenges facing the sector, including infrastructure deficiencies for international trade, energy shortages, marginal growth of 0.9%, and stalled investment projects.
The Automotive Industry’s Significance
The automotive industry is Mexico’s leading exporter, generating 22% more foreign exchange than remittances and tourism. However, it faces substantial hurdles such as trade infrastructure, energy availability, investment project pauses, marginal growth due to tariffs and operational complexity.
This was discussed during a panel at the Global Transportation & Innovation Summit, featuring Manuel Montoya, Director of the Nuevo León Automotive Cluster; Odracir Barquera, Director of AMIA (Mexican Association of the Automotive Industry); and Daniel Hernández, President of the National Network of Automotive Industry Clusters (Redcam).
From 2010 to 2024, the sector has shown consistent growth, except for a dip in 2020 due to the pandemic. In 2024, the automotive balance was $108,534 million, while tourism stood at $21,632 million and remittances reached $63,239 million, according to Odracir Barquera, Director of AMIA.
The industry is the largest value chain with over 20 million jobs, and exports amount to $193,907 million. It ranks second in foreign direct investment (FDI), with $9,434 million in 2024, of which 19% was for automobile and truck manufacturing and 7% for auto parts manufacturing.
Production and Export Trends
From January to April 2023, vehicle production was 1,299,554 units, a mere 0.9% increase compared to the same period last year. However, exports decreased by 7.3% in the first four months of 2023, totaling 1,032,819 units, as per AMIA data.
Increasing National Content
Manuel Montoya posed the question to experts on implementing Plan Mexico’s proposal to increase national content in vehicles by 15%. Odracir Barquera responded that this project is crucial for maintaining and attracting investments, offering incentives like accelerated depreciation.
Despite this, significant challenges remain to ensure proper business operation of established companies and boost FDI attraction. “One major challenge is the lack of trade infrastructure (ports, border crossings, airports) that can no longer handle the volume of exported goods and outdated customs systems,” Barquera explained.
AMIA has discussed these issues with the federal government and President Claudia Sheinbaum, who announced a customs reform in September to improve operations.
Energy supply issues have also caused industrial sector disruptions. The government is working on energy infrastructure measures and regulatory frameworks.
Although tariffs complicate the landscape, these actions remain vital to strengthening Mexico’s manufacturing sector, emphasized Barquera.
Operational Impact
Daniel Hernández, General Director of the Querétaro Automotive Cluster and Redcam President, stressed the importance of decision-making certainty for the industry, especially regarding steel and aluminum tariffs. “In this world of disadvantages, we have the least burdensome,” he noted.
As tariffs were imposed, most companies reported operational complexity as the primary issue rather than financial challenges. This included idling trucks at the border, inventory in yards, and auto parts warehouses.
Though industry growth has been marginal (0.9% from January to April), the current concern is operational. “We need to analyze how we will protect ourselves from non-compliant content nationalization percentages,” Hernández warned.
He advised preparing for the T-MEC review, particularly regarding regional content compliance to create business opportunities. “Companies not meeting auto parts or finished goods requirements should fall under the T-MEC umbrella,” he added.
Hernández also highlighted the slowdown in electric vehicle market growth, causing project delays and sector pressure. Some platforms are becoming obsolete, making 2025 a “survival” operational year awaiting reforms in 2026 and 2027.
Key Questions and Answers
- How can we implement the Plan Mexico’s 15% national content proposal? – Offer incentives like accelerated depreciation to maintain and attract investments.
- What are the major challenges for the automotive sector?
- What is the current state of the automotive industry in Mexico?
- How is the electric vehicle market impacting the automotive sector?
Significant challenges include infrastructure deficiencies for international trade, energy shortages, marginal growth due to tariffs, and outdated customs systems.
The industry is crucial for Mexico’s foreign exchange earnings, employing over 20 million people and ranking second in FDI. However, it faces operational challenges due to tariffs and infrastructure limitations.
The slow growth of the electric vehicle market has led to project delays and sector pressure, with some platforms becoming obsolete.
