Weekly Chart: Mexico's Auto Industry

By Elizabeth Gonzalez

2016 brought some good news for Mexico: a record year for car sales and manufacturing. 

Mexico might have to face the threat of losing automaker investments over fear of a future U.S. “big border tax,” but it can celebrate a record year for its auto industry. December 2016 saw more car sales and more vehicles produced than any other month in the country’s history, according to the Mexican Automotive Industry Association. As such, 20 percent more cars were sold in 2016 than the year before—a total of 1,603,672 light vehicles, more commonly known as passenger cars, ranging from sedans to pickup trucks. 

The booming auto sector makes Mexico the seventh-largest car producer in the world and the top one in Latin America, overtaking Brazil in 2014. It’s also the world’s fourth-biggest vehicle exporter, as well as the sixth-largest largest auto parts producer, making $85 billion worth in 2015. All in all, the auto industry accounts for about 3.2 percent of the country’s GDP.

The two foreign automakers with the biggest stakes in Mexico are Nissan and General Motors (GM), who hold 25 and 20 percent, respectively, of the market. Though incoming U.S. President Donald Trump criticized GM via Twitter for producing a line of compact cars in the Latin American country, the company confirmed on January 9 that it has no plans to shift its Mexican small car production back to the United States.

On the other hand, Ford, which made over 360,000 cars in Mexico last year, canceled plans to build a new $1.6 billion assembly plant in the state of San Luis Potosí. Still, Ford plans to increase its Hermosillo plant’s output of small cars—Mexico’s specialty—while U.S. plants supply domestic demand for SUVs and trucks.

Why are car companies so interested in working in Mexico? One reason: the country’s vast trade network. Mexico has 12 free-trade agreements (FTA) that give it access to 46 countries, including the European Union. For comparison, U.S. FTAs have access to 20 countries.

AS/COA Online charts the latest data on Mexico’s car industry.