Mexico needs to focus on the automotive industry

In every country, there are industrial sectors that are essential for its economy . In Mexico , in the face of the decay in the oil industry during the last decade, the automotive industry took off, as well as the textile , metallurgic , and plastic industries , which have boosted the local economy .

Nevertheless, the dynamism in the sector has fallen in the last 28 months after car sales have decreased in the last 29 months. For the assembly plants , the decrease in car sales registered in the Mexican market in the last two years is a normal cycle inside the industry. In 2016 , around 1.6 million vehicles were sold in the country, a record number, but in 2017 , the sales have decreased constantly; in 2019 , it is estimated that only 1.3 million cars will be sold.

According to the INEGI , in October 2019 , only 107,000 vehicles were sold, 9% less than in October 2018 and the worst number registered since 2014 . In the near future, it doesn't seem like the situation will improve. On the contrary, the economic panorama could place the sector at the center of a storm.

In nine days, the six-month-term U.S. President Donald Trump gave Mexico will end, after he threatened to impose a 25% tariff on the cars exported from Mexico to the U.S. This situation, along with the uncertainty surrounding the ratification of the USMCA , is alarming.

There are also internal factors that have repercussions in the performance of the industry. On one hand, in the lower chamber , there is a proposal to legalize millions of vehicles that are smuggled into Mexico from the U.S. and on the other, the stagnation of the Mexican economy .

In regards to the international stage, Mexico can't do much, but inside the country, those in charge of making decisions in regards to the economy can work to improve it.

After the acquisition of a home, the purchase of a vehicle is an important decision for Mexican families because it usually implies requesting a loan but it families perceive economic uncertainty , the purchase will be delayed.

The automotive industry employs over 800,000 people, almost 50 brands have a presence in Mexico , there are 22 assembly plants , and in 2018 Mexico became the sixth-largest car producer in the world, and in recent years, this industry represented 3% of the GDP and 18% of the manufacturing GDP .

Therefore, Mexico should focus on this industry and improve it before it worsens.

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