A home to the largest companies worldwide
As auto companies expanded internationally, Mexico became the manufacturing home to many of the leading car brands worldwide, such as “the American Big Three” (General Motors, Ford, and Chrysler), along with German Volkswagen, Japanese Nissan, and South Korean Kia. And while Ford remains the longest-running brand in the country, nowadays the light vehicle production in Mexico is dominated by General Motors and Nissan. In 2020, these two brands combined accounted for more than four out of every ten light vehicles produced in the country. A year later, in 2021, it was estimated that Chevrolet and Nissan together held more than 30 percent of the passenger cars revenue. Perhaps unsurprisingly, in a market dominated by international brands, the annual foreign direct investment in the automotive industry in Mexico stood above five billion U.S. dollars in recent years. While the Mexican automotive market remained attractive for foreign investors, the COVID-19 pandemic still impacted the industry. 2020 Investments dipped by just under a third of the FDIs recorded in 2019, with auto parts production being the most impacted sector. Despite the large multinational participation, this industry has played a significant role in driving the local economy, generating around 100,000 jobs in the vehicle manufacturing sector alone in 2021. This was over 2019 employment figures, highlighting the recovery of the sector in the aftermath of the health crisis.North American trading partnership
In the first nine months of 2021, the American continent was the main destination of Mexico’s light vehicle exports, representing nearly 89 percent of its export value. A year earlier, the United States was in the lead as the main country of origin to its southern neighbor’s auto imports, dwarfing all other countries. This signaled an extremely strong yet co-dependent auto trade partnership. Regardless of the continual increase in imports reported up to 2019, Mexico’s automotive industry has maintained a positive trade balance throughout the past decade. This was also reflected throughout the COVID-19 pandemic, despite the slump in both imports and exports in the country. With the implementation of the USMCA trade agreement between the United States, Mexico, and Canada in June 2020 - which renewed previously established free trade regulations between the North American neighbors - the partnership already observed for the automotive industry in these three countries is expected to be even further developed in this new era.
