Mexico’s auto production keeps humming

on Sep10

Kia’s plant near the northern city of Monterrey is one of many auto manufacturing sites newly opened or planned.

MEXICO CITY — The Mexican auto industry is crushing its production and export records, and there’s little sign that a slowdown in U.S. sales or threats to the North American Free Trade Agreement can slow it down.

The momentum from a slew of auto industry investments in recent years has carried the industry to peak capacity and that’s likely to continue as new plants and plant expansions come online, industry officials said.

Even a possible U.S. exit from NAFTA would take time to ripple through the Mexican auto industry and would have its biggest impact on pickup trucks, which make up a significant part of its vehicle exports.

In August, Mexico produced 351,855 cars and light trucks, up 5.7 percent from a year earlier, and exported 260,607 vehicles, a 0.8 percent decrease due mostly to Hurricane Harvey, said Eduardo Solis, president of the Mexico Automotive Industry Association.

For the year through August, Mexico auto production totaled just over 2.5 million units, up 10 percent; exports were up 11 percent to about 2 million units. Exports were up across key markets: the U.S., Canada, Latin America, Europe, Asia and Africa, along with smaller markets in the association’s “other” category.

Auto plants that have opened in the last year include Kia’s sprawling facility near the northern industrial city of Monterrey and Audi’s Q5 crossover factory in the central state of Puebla. BMW, Toyota and a Mercedes-Infiniti joint venture all have plants under construction in Central Mexico.

Domestic auto sales, on the other hand, have cooled recently after five straight semesters of gains and record sales last year. Local sales were off 6.5 percent in August to just over 125,000 units and roughly flat for the year at nearly 1 million units, according to Guillermo Rosales, co-director of the Mexican Automobile Distributors Association.

If the current talks among the U.S., Mexico and Canada to renegotiate NAFTA fail, causing the U.S. to exit, Mexican car exports would be subject to a 2.5 percent tariff under the rules of the World Trade Organization, and pickups could be hit with a 25 percent tax, Solis said.

“I think that in autos, the 2.5 percent in tariffs is manageable,” Solis told Automotive News.

The pickup tax would be more problematic. Heavy-duty pickups from General Motors and Fiat Chrysler are the top exported vehicles to the U.S. Toyota is expanding production of its Tacoma midsize pickup in Baja California, and is building a new Tacoma plant in Central Mexico.

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