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TRUMP’S PRESIDENCY Implications for the Mexican Automotive Industry Despite Donald Trump’s election, Mexico will not experience an immediate downturn because his proposals will require at least two years to come to fruition. However, in the interim, several risks may arise:
Renegotiation of NAFTA or withdraw from the deal under Article 2205
• Promise to prevent US manufacturers from moving US jobs overseas, particularly to Mexico
• Opposition to carmakers setting up plants in Mexico Rise in import costs and tariffs
Loss of brand competitiveness for Mexico-reliant producers
Slowdown in FDI into automotive production
Downsizing of investment projects
Decreasing inflow of remittances
Fully implement End Illegal Immigration Act with construction of a wall on the southern border
Source: EY (USA New Government: Implications for the Mexican Automotive Industry, February 2017), Banco de México
technology will play an increasingly large role in the develop- ment of the auto industry, both in Mexico and abroad. Enrique Enrich, CEO of Scania Mexico, describes how fleet owners are sharpening their focus on efficiency and sustainability, in part because natural gas is becoming a factor in the heavy vehicle segment. In addition to its relatively low cost, natural gas is also lower in emissions, and natural gas engines run more qui- etly than traditional gasoline or diesel engines. Other emerging innovations include hydrogen-powered cars and fully electric vehicles.
Enrich views sustainability broadly, especially where fleets are concerned. “It includes matching the right vehicle to the right job, training drivers, tracking travel through sophisticat- ed telemetry,” he says, explaining that new telemetry allows
operators to monitor emissions and wear and tear on individual vehicles.
Barak Gazit, CEO of Traffilog Latin America, added that telemetry is just one step removed from autonomous vehicles, which, he believes, are just around the corner. “A good comput- er will make better decisions with the vehicle—you will have fewer accidents, less traffic, and less pollution,” Gazit asserts.
That technological opportunity presents its own challenge to Mexico. As more car companies begin to collaborate with tech- nology companies, the pressure is on auto manufacturing hubs to become tech hubs as well. That means that in addition to its base of parts and vehicle production, Mexico needs a strong network of universities and research centers in order to fully capitalize on the industry shift. Mexico has done nothing but
Since 2010, Mexico’s auto industry has received US$21 billion in foreign direct investment, in- cluding the construction of six new vehicle and motor assembling plants and the expansion of five existing plants.
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POLICIES INVOLVING MEXICO