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‘Bill collection’ to the automotive industry

The automotive industry in Mexico still shows weak conditions, affected by bottlenecks and shortage problems, which, far from giving in, have lasted throughout the year.

The automobile sector continues to charge bill disturbances caused by semiconductor shortage for the manufacture of transport equipment, to which since the end of February was added the impact of the war of Russia against Ukraine.

Last April, the production of the national automotive industry was 6.6 percent lower than that of the same month of 2021, according to INEGI data.

In terms of units, 251 thousand 547 vehicles were assembled, which, removing 2020 due to the pandemic, represents the lowest production for a fourth month since 2014affected by disruptions in the supply of essential parts, such as micro components.

The problem has been aggravated by isolation measures in several Chinese cities and provinces since the end of March to contain the recent increase in covid-19 infections.

Lockdowns in key Chinese manufacturing and trade hubs like Shanghai are deepening supply chain problems in other regions.

To that is added the rising cost of supplies for the production of motor vehicles, such as steel, aluminum and glass due to the effects of the war between Russia and Ukraine.

One more factor against the automotive industry, coming from the national environment, is the decree for the regulation of foreign used vehicles in the country, in force since the end of January, which allows cars of foreign origin without legal documentation to be imported. definitely.

The legalization of ‘chocolate’ cars in a dozen states, through a government decree that did not take into account the opinion of the private sector, it sends the wrong signal to the automotive industry, which has always fought the entry of illegal vehicles.

Although supply chains have been under pressure for months due to the pandemic and, recently, the Russian invasion of Ukraine, the export of automobiles seems to leave behind the sluggishness.

In April of this year, 241,286 armored vehicles were exported in Mexico, an increase of 2.9 percent compared to the same month in 2021.

Driven by the reactivation in the United States, sales in the external market registered an increase at the annual rate in both March and April, after eight consecutive months in negative territory.

Even so, shipments abroad are barely above those observed in April 2017, according to INEGI records.

In terms of volume, Mexican automotive exports have not yet reached the levels registered before the Covid-19 health emergency, but in value they are already beginning to exceed them.

Both in February and March, they exceeded 14.2 billion dollars, an amount that is above the more than 12 billion reported in the same months of 2020, so that they are already above pre-pandemic levels.

The automotive sector is called to be one of the main engines of growth of economic activity in our country, as it was during the crises of 1995 and 2008-2009.

The Mexican automotive industry is one of the most competitive in the world, being the third largest exporter of vehicles and the fourth largest exporter of auto parts.

Mexico is one of the main vehicle manufacturers light that are mainly exported to the US given its geographical proximity and the integration of markets in the T-MEC.

During the January-April period of this year, about 84 percent of the national production was destined for external sale.

The challenge is to make progress in solving the shortage problems of semiconductors and other inputs in the sector.

Disruptions in supply chains can open a window of opportunity to attract investment to Mexico and give way to the arrival of new suppliers and companies to the automotive market, especially ‘green cars’.

In due course, the reestablishment of distribution channels and the possible nearshoring of manufacturing to transfer certain productive processes to the country.

Will it be possible to make the leap from collapse to disruptive change?

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