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Since 2010, Mexico’s auto industry has received US$21 billion in foreign direct in- vestment, including the construction of six new vehicle and motor assembling plants and the expansion of five existing plants.
In 2015, 11 percent of light vehicles and 80 per- cent of heavy trucks sold in the United States were imported from Mexico.
existing production network. “In the OEM business, I think the best possible scenario is for Mexico to offer its infrastructure
to supply companies and see what we can do to join forces.” He points to tier 1 suppliers outside the country—primarily from China, Japan, and Germany—who are already manufacturing on Mexican soil.
Mexico’s status as an auto hub is also one of its best tools to retain the industry. Enrique Vilatela Riba, President & CEO of InvestaBank, advises, “One way in which you can take advan- tage of the export potential in Mexico is by helping Mexican companies become a supplier to the full export chain.” Indeed, even as protectionist pressures rise from countries like the United States, experts say that Mexico will be hard to beat because of its nearly unshakeable perch within the supply chain. In other words, regardless of where a company ultimate- ly builds its cars, there’s a very high likelihood that some or all of the parts will have been made in Mexico. With that supply chain foothold, Mexico will always present a strong value prop- osition.
DANGEROUS CURVES AHEAD
As Mexican officials worked on long-term planning, the auto- motive industry enjoyed something of an acceleration in 2016.
Still, Leonardo Soloaga, Managing Director of MAN Truck & Bus Mexico, cautions that continued growth in 2017 is not a foregone conclusion. For one thing, the 2016 rebound might have as much to do with geopolitics as anything else. He notes that Mexico is waiting to see what stance the United States, under President Donald Trump, will take in its coming renego- tiations of NAFTA. “Especially in the last months of 2016, this recovery was probably pushed by the uncertainty of the eco- nomic scenario for 2017,” Soloaga says, adding that 2017 could see “lots of ups and downs” in the automotive industry.
Beyond the boundaries of factories and supply chains, the country faces myriad challenges, including an educational system that lags behind those in the United States and the Eu- ropean Union; infrastructure deficits, such as underdeveloped ports; high utility costs; and the perception of high crime in the country. Government officials have been working to offset those concerns by increasing investment in schools, infrastructure, and law enforcement and by easing financial regulations and other legal hurdles to doing good business.
CHANGING GEARS
While business leaders face uncertainty about how trade might be affected in the coming years, there is no question that
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