Covering the Industry's Economic, Legal & Financial Issues

MexicanAutomotive covers the Mexican automotive and auto parts industries, and is published monthly in English and Spanish. MexicanAutomotive reports on general Mexican automotive industry topics, as well as economic, financial and legal issues affecting the North American automotive industry. Published by Cacheaux, Cavazos & Newton (CCN), subscriptions to MexicanAutomotive are free. CCN is an international law firm with offices in Texas and Mexico. The firm provides legal services in many practice areas including Automotive law to clients doing business in the NAFTA region.

MexicanAutomotive.com | English
Motorcycle boom in Mexico E-mail

The motorcycle boom is not a phenomenon exclusive to Mexico, but rather a global movement due to various reasons. Among these reasons is heavy traffic in large cities, less contamination by motorcycle engines as opposed to those in automobiles, low gasoline consumption, and shorter travel times. Motorcycles have seen increased popularity in major Mexican cities, not only for sports purposes, but also as a means of transportation. This phenomenon is evident by the fact that 76,961 new motorcycles were sold at the end of 2010 in Mexico, while as of September 2011, the figure has almost been surpassed since statistics show that 76,680 motorcycles have been sold. Taking into account that the last months of the year usually see a notable increase in the sale of vehicles, it is estimated that the increase will be greater than 20% in comparison to the previous year. While the sale of motorcycles has logically increased in the major Mexican cities of Mexico, Guadalajara and Monterrey, urban concentrations throughout Mexico have also experienced this phenomenon, since the motorcycle is an agile, rapid and efficient alternate means of transportation. It is very common to see motorcycles on the street with low cylinder capacity, including work scooters and motorcycles such as those used by food delivery personnel and messenger services. The majority of motorcycles sold (80% of the total amount) have 51 to 125 cubic centimeter cylinder capacities. Lower prices, accessible financing plans and greater use as a means of transportation are the reasons behind this boom in transportation. Tank Sports, a Mexican assembler, has grown 16 times its size from 2001 to 2005, as it recorded an annual cumulative increase in sales of 105% and assembled more than 22,000 motorcycles and a similar number of bicycles. How can the Mexican market take advantage of this boom in motorcycles? It can take advantage of this boom by having a greater number of motorcycle distributors, especially because exporters request distributors. The sales of parts and accessories for motorcycles create a real opportunity since every motorcycle sold requires storage batteries, tires, spark plugs, accessories, tail lights, pedals, screws and grills. Drivers also need safety helmets which are required throughout Mexico, protective gear and clothing, eye wear, and boots or shoes to drive on two wheels. In the same manner, good repair shops specialized in motorcycles are a good business opportunity in light of the motorcycle boom.

 

 
U.S. Ambassador to Mexico is interested in the Mexican automotive industry E-mail

Anthony Wayne, the new U.S. Ambassador to Mexico, recently met with automobile and auto parts manufacturers in order to become familiar with the current state of the automotive industry in Mexico. In the past few years, General Motors, Ford and Chrysler have made significant investments in Mexico, which has impacted the growth of the industry. The figures indicate that from 2009 to 2010, automobile production in Mexico grew by 50% and exports by 52%. The automotive industry is the second highest exporting sector in the country. In 2010, almost 70% of those exports were destined for the United States. At the meeting, Ambassador Wayne noted that he was honored to be meeting with such important industry leaders. The automotive sector is of fundamental importance in the United States as well as Mexico. The ambassador indicated that he hoped to create a more competitive North America, and that he would continue to closely follow the work of automobile and auto part manufacturers.

 

 
First Mexican cargo truck crosses the United States border E-mail

 

After 17 years of international litigation, foreign trade will enter a new phase of regulation under the Cross Border Trucking Program for cargo between Mexico and the United States, which is intended to strengthen commercial transactions between both countries. Olympic Transport, the company which began the transit of trucks and trailers, is domiciled in Nuevo Leon and its trucks are currently traveling U.S. roads. The transit of Mexican as well as U.S. trucks which travel Mexican roads marks the beginning of a new mutually beneficial phase in the commercial relationship between the two countries. The border crossing will be more agile, and exchanges will be quicker and more efficient. The 2009 model Freightliner by Olympic operated by Josué Cruz from Monclova, Coahuila crossed World Trade Bridge III and made its delivery in Texas with an approximate 720 kilometer trip in about seven or eight hours. The implementation of this Program served to cancel the punitive customs duties which the Mexican government imposed on 99 products from the United States. These sanctions were imposed in retaliation for the cancellation of the first Cargo Transportation Demonstration Program, which was in its pilot phase at the time, and in which 27 Mexican companies with 104 units and 10 American companies with 52 units took part.

 

 
Mexican automobile looking for luck in Europe E-mail

The Mexican automobile assembler Mastretta has begun exporting the MXT Mastretta. Thirty percent of production will remain in Mexico, while 70% is destined for Europe.  Mastretta plans to produce 200 autos the following year.  At the moment, it is looking to obtain the European certification in order to produce autos on that continent.  The MXT Mastretta entered the public spotlight as a result of a disparaging comment on the automotive program, Top Gear, on BBC London where the hosts compared it to a tortilla.  This comment even led to a minor diplomatic incident but served to highlight the fact that it was a Mexican brand garnering attention.  The Mexican automobile will have a price of $58,000.00 and will be available in electric orange.  One of its creators, Daniel Mastretta, stated that they acquired 0.5% of the market this year.  Currently, 40 workers assemble an MXT each month at the Mastretta Design factory in Toluca, Mexico.  By the end of the year when production has stabilized, the goal is to finish two cars per week.  According to the Mastretta brothers, the production of a compact auto requires a factory investment much more costly that that made to assemble and design 100 autos per year, with techniques which they say are akin to artisan work.  In an interview, the Mastretta brothers stated, “In order to manufacture a compact automobile or a cheap one, we would need to invest a lot and the truth is, our techniques are akin to artisan work because they are industrial techniques which are low volume and highly controlled.However, despite this low volume niche, our market is surpassing us.”

 

 
Honda to invest 800 million dollars in Mexico E-mail

Honda Motor Company, Ltd. announced that it will invest 800 million dollars in the construction of an automotive plant. The plant will employ 3,200 workers. The production of subcompact vehicles will begin in 2014. It is anticipated that the plant will have the capacity to assemble 200,000 units annually. The plant will be constructed in the city of Celaya in the state of Guanajuato.

 

 
MexicanAutomotive Stats E-mail
  • So far in 2011, internal auto sales are up 18.9%, yet are still lower than those recorded for the same period in 2007.
  • In September 2011, internal sales grew by 12.2% with 73,997 vehicles sold, compared to 65,932 sold in September 2010.  The total sales figure for 2011 is 11.6% higher than that recorded through September 2010.
  • Total production grew by 14.1% in September 2011 to 225,287 units.  The cumulative total amounts to 1,905,659 lightweight vehicles, a 14.7% increase compared to 2010, and 19.6% higher than the cumulative amount as of September 2008.
  • In September 2011, exports increased by 14.2% compared to the same month in 2010 (193,590 units).  As far as the cumulative total, the difference is 14.8% higher than in 2010 and 25.5% higher than in 2008.
  • In September, the internal market for the United States was 9.8% higher than in August 2011 with an increase of 10.3% to the cumulative total as of September 2011, compared to the record for 2010 with 9,485,612 lightweight units sold. This is true even though a negative difference of 11.6% persists with respect to the cumulative total as of September 2008.
  • As far as the cumulative total from January to September 2011, exports to the United States increased by 7.4%, to Canada by 18.7%, to Latin America by 62.9%, and to Europe by 14.8%. Meanwhile, Africa and Asia reported decreases by 27.9% and 35.5% respectively, compared to the same period in 2010.

 

The Mexican Department of the Economy announced that Mexico’s cumulative auto production reached a “historic high” between January and September 2011, with 1.9 million vehicles manufactured.  In 2011, the Mexican automotive sector has been “one of the most dynamic sectors in the national economy due to its high levels of production as well as its number of exports.”  The data confirm that the automotive industry is the most important industrial manufacturing industry in Mexico.  The principal auto manufacturers in the world have plants in Mexico and the majority of production is destined for export.  The largest manufacturer in Mexico is General Motors (GM), followed by Volkswagen, Ford, Chrysler and Toyota.

 

 
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