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The Auto Parts Industry in Mexico

Prepared by Grupo Jomar’s Business Intelligence Unit

Main indicators of the industry in Mexico 2012

$

5th

1. 2. 3. 4. 5.

Production of auto parts in Mexico 74,795 md3

Consumption of auto parts in Mexico 59,156 md4

Foreign direct investment in the auto parts industry, 2006-2012 9,687 md5

Number of Jobs in the auto parts industry, as of December 2012 583,7066

Mexico’s exports from the auto parts industry, 2012 51,872 md7

Mexico’s imports to the auto parts industry, 2012 36,233 md7

Economic units 2,5598

Clustersoftheautopartsindustry,2012. Northeastern, northwestern southeastern and centralBAJIO region9

Largest producer of auto parts worldwide1, 3

5th

Largest exporter of auto parts worldwide7

Source: ProMexico with data by Global Insight Source: ProMexico with data by Global Trade Atlas Source: Industria Nacional de Autopartes (INA) and INEGI. Source: ProMexico with data by Global Trade Atlas and Global Insight Source: ProMexico with data by the General Directorate of the National Registry of Foreign Direct Investment, Ministry of Economy.

Positive Outlook • In Mexico, the auto parts industry follows the same trend as the automotive industry as a whole. This has a positive impact, light vehicle production has reached historic record levels and consistent growth. • The automotive industry is expected to continue growing in the future and Mexico will produce more than 3.7 million light vehicles by the end of 2016, which will mean an increase of 28.5% compared to production levels reported in 2012 • The growth of the automotive industry benefits the auto parts industry because the market will demand a wide range of products for assembly companies’ production lines, while the number of vehicles sold will increase the demand from the aftermarket or spare parts market segments.

Industry at glance • The automotive sector has been a platform of economic development and a source of prosperity. • It provides employment to over 66,000 people, representing 3% of Mexico’s GROSS DOMESTIC PRODUCTS and generates 32% of our total exports. • Today Mexico is the fourth largest exporter and seventh largest vehicle manufacturer in the world. • The automotive industry has become one of Mexico’s most dynamic sectors. It generates 3% of GDP, 17% of manufacturing GDP, and 32% of the country’s total exports.

Industry at glance • The auto parts industry accounts for 3.6% of total production of the global manufacturing industry. The industry is very diverse, covering final consumer goods used to supply Original Equipment Manufacturers (OEMs) known also as automakers, and supplying the aftermarket or used car replacement. • It is organized into three production levels: • Tier 1: Direct suppliers of OEMs. They develop components that include engine parts, steering and suspension systems, air conditioning systems, electronic components, etc. • Tier 2: Suppliers of Tier 1. They manufacture equipment and products used in the most advanced and specialized components of the automotive industry: forged, stamped parts, die casting, plastic parts, machined parts, etc. • Tier 3: They provide inputs and raw materials to Tier 2 manufacturers complying with the highest quality require- ments of the automotive industry.

High demand products used by assemblers Mexico must promote investments in major components because they are in high demand by assemblers and are mostly imported. Some of the components identified as missing from the production chain are: • • • • • • • •

Transmissions Fuel engine Bodies Safety systems Injectors Sensors Dashboards Pumps

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Major auto parts for light vehicles Major components require a high degree of sophistication. The companies that produce them base their production on advanced manufacturing, developed technology innovation and increased low cost production. These components include: Pumps Main harness Crowns and pinions Safety systems Bodies Suspensions Air bags Crankshafts AC systems Radiators Compressors Injection systems Catalyzers Alternators Indicators Sensors Gears Dashboards Power window/ Windshield wipers Audio Video/Multimedia Tires Rims Transmissions

Minor Auto parts for Light Vehicles The production of small components does not require a high degree of sophistication; manufacturing is basic and requires a minimum of technology integration. As with major auto parts, these components must comply with quality standards to guarantee their operation. These components include the following: • • • • • • • • • • • • • • • • • • • •

Air filters Washers Pistons Gas tanks Torque rods Pins Hoses Forks Disk/drum brakes Oil sump Engine valves Tank caps Hubs Accessories Rises Clamps Spark plugs Tracks Joints

The future is bright • Aftermarket Mexico has a large number of older cars, providing opportunities for repair and aftermarket parts and accessories. • 57 percent of total vehicles are 10 years old or older. • The average Mexican consumer owns a 17-year-old vehicle. • The combination of the age of the vehicles with poor road conditions that put excessive strain on vehicles provides a prime market for aftermarket parts.

The future is bright • The establishment of assembly plants has boosted the emergence of regional clusters. • Regional clusters fostered by exponential development surrounding the Nissan plant in Aguascalientes, or the area near the Honda and Mazda plants in Guanajuato. Similarly, this is occurring near the Fiat-Chrysler and General Motors plants located in Coahuila, and the Volkswagen plant in Puebla as well as KIA in Monterey.

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• 57 % of total vehicles are 10 years old or older. • The average Mexican consumer owns a 17-year-old vehicle.

The combination of the age of the vehicles with poor road conditions that put excessive strain on vehicles provides a prime market for aftermarket parts.

SINCE 1974 41 YEARS EXPERIENCE IN AUTO PARTS AFTER MARKET INDUSTRIES

Own Brands

Aftermarket business opportunities • • • • • •

Gasoline and diesel engines, Transmissions, clutch, traction parts, Electric parts ,fuel injection Maintenance equipment (Oil, Oil filter, Air Filter, Spark Plugs, Antifreeze Breaks, Shock Absorber Cooling system

Thank you