Strategic intelligence in Latin America

Driving a recovery

Short-,medium- and long-term priorities for the automotive industry in Mexico and Brazil.

Even before the pandemic, Latin America was struggling with weak growth and the deindustrialisation of its economies.

Mexico and Brazil make up more than half of Latin America’s population, GDP and trade, and have maintained their strength in specialised manufacturing, particularly in the automotive industry, where they are among the top ten producers of light automobiles and heavy transport in the world.

It is important to note that there are significant differences between the automotive sectors in Mexico and Brazil. According to an Executive of the Mexican Association of the Automotive Industry (AMIA), “Mexico has its strength in exports, with more than 85% to the US and Canada.” Brazil on the other hand “has little export but maintains a strong domestic market, unlike Mexico,” explained a Brazilian Executive of the Latin American Association of Automotive Distributors (ALADDA).

Using our source-led methodology, we consider the outlook for this sector that is critical to both countries:

“Mexico doesn’t have a plan for economic reactivation, but Brazil has allocated almost 10% of its GDP to it.”

Executive of the Mexican Association of Automotive Distributors (AMDA).

An executive at the Mexican Association of Automotive Distributors (AMDA) lists what he believes are the short-term priorities for the sector: “Save the network of services, suppliers and assemblers already in place. Stretch margins to maintain skilled human resources. Consolidate the manufacture of iconic electric vehicles, e.g. the electric Ford Mustang that will be produced in Mexico and shipped worldwide.”

The same source also flags imminent risks facing the sector, “Mexico does not have a plan for economic reactivation, but Brazil has allocated almost 10% of its GDP to it.” Mexico will also see increasing political pressure due to the massive imports of American automotive scrap.

There is consensus among our sources at AMIA, AMDA and the National Association of Producers of Buses, Trucks and Tractors (ANPACT) on the medium-term outlook: “Producers must pressure their governments to reduce economic informality and promote programmes to reactivate the vehicle fleet, with an emphasis on SMEs and agriculture. Additionally, the sector should strengthen its financing capacity, review its energy efficiency regulations and create more value than competitors in India, China and Turkey.”

“They need to review their energy efficiency regulations and create value compared to the competition from India, China and Turkey.”

Executive of the Mexican Association of the Automotive Industry (AMIA).

For an Executive of the National Industry of Auto Parts (INA) in the long-term, the industry has to, “Promote State policies between the public and private sectors for the energy transition in electric and hybrid vehicles. Analyse investments in the sector from China or new Western brands. Consolidate technical and innovation expertise to balance productive imbalances (auto parts and new alloys) in the transition from combustion to electric mobility. Adjust services to digital mobility platforms and develop world leading public transport.”

We are well-positioned to help should you like a deeper dive into the opportunities and challenges facing the automotive sector in Latin America.

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