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Septiembre de 2021 Página 2 de 2

Mexican automotive parts industry: between crisis and opportunity

Nancy García, a Mexico correspondent

The pandemic and the shortage of plastic raw materials have affected the sector. However, the T-Mec could tip the balance in Mexico's favor in the long term.

In the opinion of Francois Ouellet, plant director of Exo-s Mexico, the renegotiation of the T-MEC will increase the production of Asian companies in the country as they seek to benefit from the advantages of the trade agreement: "Chinese companies, for example, are in the process of establishing themselves in Mexico to produce here and be considered within the T-MEC, which is very good for us".

The clearest business opportunity for the sector lies in attracting suppliers of raw materials and other components needed by Tier 1 manufacturers, who are in North America and import raw materials from China, Germany, and Japan. "Manufacturers of these components will be able to locate in any country in the region, not just Mexico, and that is where we have competition," explains Albin.

For his part, Exo-s executive considers that the most important challenges of the T-MEC are the adjustments to the Labor Law, the controversies that have arisen in the unions, and the wage increase in the Northern Border Free Zone.

The future of automotive parts in Mexico

The auto parts sector has grown 100% in the last 10 years, says Albin. In his opinion, the situation arising from Covid 19 is not a factor that could limit the industry's growth. However, tax law reform is needed to help encourage foreign investment, as well as a promotional campaign to attract private capital to the sector.

In addition, he believes that with the arrival of hybrid, autonomous and electric cars, the panorama of auto parts in Mexico will not change, as only 30 to 25% of their components will be modified in automobiles: the exhaust system will disappear, the cooling system will be reduced, and electric motors with batteries will be incorporated, requiring cables that are manufactured in Mexico. "There will be losers and winners. Although it is a transformation that we are still far from realizing".

For Exo-s, the future in Mexico looks promising, and they have plans to expand their plant to meet customer demand. They are also analyzing the possibility of opening another installation in the country to reduce costs and transportation time, as they are confident that the auto parts industry in Mexico will grow.

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