Concern Rises Over U.S. Auto Market While Mexico’s Thrives

GMC Terrain: Production moving to Mexico

Mexico isn’t known for its thriving economy or world-class production facilities. A week spent there earlier this month showed me that it’s a country filled with delightful people, gorgeous beaches, and a rich and colorful culture—but is also rife with political turmoil, poverty, and violent crime.

Mexico is still classified as a developing country but has potential to overcome its problems and compete in the world economy.

The auto industry has become one of Mexico’s bright spots and continues to shine, even as the market in the United States begins to tighten up and shrink.

A Reuters article says,

In a conference call with media and analysts, officials of the National Automobile Dealers Association said they expected sales of cars and light trucks in the United States to dip to 17.1 million vehicles this year, high by historical standards but below 2016’s record 17.55 million vehicles.

The NADA call came just two days after disappointing industry figures for March that showed an annualized sales rate of around 16.6 million units.

Rising interest rates could further hurt U.S. sales numbers, because consumers tend to shy away from expensive car loans. If stock starts to pile up, we can expect summer production shutdowns in U.S. plants.

Mexico’s plants, meanwhile, are running at full speed despite President Trump’s desire to quell imports from our southern neighbor. Currently, about 76 percent of Mexico’s auto exports go to the United States.

AutoNews says,

Foreign automakers in Mexico cranked out 943,704 new cars and light trucks in the January-March period, with output rising by 36 percent alone in March to 363,687 vehicles, the Mexican Automotive Industry Association said Thursday.

First-quarter exports rose to 750,162 units vs. 657,058 in the year-earlier period, with exports for March jumping 33 percent to 297,571 vehicles, said the association known as AMIA.

Not only are the country’s production numbers up, Mexican citizens are also buying more cars. Mexico’s March sales are up 17 percent compared with last year, signifying an improvement in the personal finances of Mexican residents.

Ford, GM, and FCA have plants in Mexico, as do many foreign automakers including BMW, Audi, Toyota, Honda, Nissan, Kia, and more. The country plays a vital role in the worldwide automotive market and its lower labor costs help keep prices down for consumers here in the States and elsewhere.

About 14 percent of all new vehicles sold in the U.S. were made in Mexico. Would you pay more for one built in the United States?

-tgriffith

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