Mexico’s auto production could fall by 30% in 2020 while exports may slide 33%, according to Fausto Cuevas, director general of the Mexican Association of the Automotive Industry (AMIA), during a video press conference Monday.
The country’s automotive production industry — which includes passenger vehicles and heavy-duty trucks — was hammered by Mexico’s closure of all nonessential businesses on March 30 to slow the spread of the coronavirus. This included automakers such as Chevrolet, General Motors, Ford, Mazda, Nissan, Toyota, BMW and Volkswagen.
“In production, we don’t have enough information to make a concrete forecast; everything is changing, but we could see a drop in production of 28-30% and in exports a similar situation, with a decline from 30-33%. It is important to see the behavior of the U.S. market. That will give us a pattern to know what will happen with production and export,” Cuevas said.
Cuevas said a 30% decline in production and 33% fall in exports would be the biggest drop in the history of Mexico’s auto sector.
Joining Cuevas on the videoconference were several other trade organization leaders from Mexico’s automotive industry. They issued similarly grim predictions.
Heavy-duty truck and bus manufacturing in Mexico could fall by as much as 20% by the end of 2020, said Miguel Elizalde, president of Mexico’s National Association of Producers of Buses, Trucks and Tractor-trailers (ANPACT).
Freightliner has two truck manufacturing plants — in the cities of Saltillo and Santiago, Mexico; while Navistar has a large truck assembling operation in Escobedo, Mexico.
Oscar Albin, president of the Mexican Auto-parts Association (INA), said a 32% drop in the billing of parts and components is expected, and the start of the United States-Mexico-Canada Agreement on July 1 could pose another challenge for the recovery of the sector.
The USMCA’s long-awaited uniform regulations were published Wednesday by the Office of the U.S. Trade Representative.
For the auto sector, the USMCA requires that by 2023 at least 75% of parts in passenger vehicles and 70% of parts in heavy-duty trucks must be made in North America.
Cuevas said he expects many car and heavy-duty truck makers with cross-border operations to apply for alternative staging regimes in the USMCA trade pact. The alternative staging regime is a mechanism aimed at providing additional time for automotive producers in Mexico for compliance with the new rules of origin regulations in the USMCA.
The USMCA provides that for a period ending no later than Jan. 1, 2025, or five years after entry into force of the USMCA, “a passenger vehicle or light truck may be originating pursuant to an alternative staging regime.”
Elizalde said he doesn’t expect many heavy-duty truck makers to apply for the alternative staging regime.
“We are not aware of any plants that are planning to apply for the alternative staging regime,” Elizalde said.
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