NAFTA and the Mexican Automotive Industry Eduardo J. Solís Sánchez Executive President Asociación Mexicana de la Industria Automotriz December 7th, 2017
Automotive Sector Economic Relevance: Top generator of foreign reserves. With a foreign trade surplus of 62.8 billion dollars in 2016 Contributes with 3.3% of total GDP and 18.3% of manufacturing industry GDP Mexico has become the 7 th largest manufacturer of vehicles and the 1 st in Latin America 1/3 of manufacturing sector exports corresponds to automotive products. 4 th largest exporter in the world 5 h largest automotive parts exporter and first supplier for the United States 2
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 jan-nov 16 jan-nov 17 Million units Production and Exports Contributes with 3.8% of total world production. More than 80% of total production is directed to foreign markets. 4.0 3.5 Production Exports Δ 9.4% 3.0 2.5 2.0 Δ 11.7% 1.5 1.0 0.5 0.0 Source: AMIA. 3
Automotive Industry GDP From 2008 to 2016, Mexican automotive industry has consolidated as one of the most important in the Mexican economy increasing its share in total GDP and manufacturing sector GDP by 48%. Automotive industry share Total GDP Automotive industry share Manufacturing industry GDP 2.0% 1.7% 2.1% 2.3% 2.5% 2.6% 2.9% 3.2% 3.3% 17.1% 18.1% 18.3% 15.7% 14.7% 13.8% 12.8% 12.0% 10.4% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2008 2009 2010 2011 2012 2013 2014 2015 2016 the automotive industry impacts 84 economic activities of manufacturing industry and 73 of trade and services. Source: INEGI Sistema de Cuentas Nacionales. 4
Manufacturing sector in Mexico Into manufacturing sector, the automotive industry is the second GDP generator. Share manufacturing industry GDP 1993 2000 2005 2014 2015 Percentages 100.0 100.0 100.0 100.0 100.0 Agroindustry 24.1 20.2 22.7 22.3 22.1 Automotive industry 11.2 13.5 12.1 18.1 18.3 Chemistry industry 9.4 11.1 12.6 9.3 8.9 Basic metal industry 3.3 4.5 6.4 5.1 5.4 Beverages and tobacco industries 4.5 4.7 5.5 5.0 5.0 Other industries 47.5 46.0 40.7 40.2 40.2 Source: INEGI Sistema de Cuentas Nacionales. 5
Manufacturing sector employment 2014 Other industries 54.6% Agroindustry 17.3% Clothing 5.9% Automotive industry 14.4% Metal products 7.7% The automotive industry employs 730,923 people directly, representing 14.4% of total manufacturing sector employment. Source: INEGI Censos Económicos 2014. 6
Millones de dólares Automotive industry exports importance 120,000 100,000 80,000 60,000 40,000 20,000 0 103,482 24,634 17,446 16,924 2013 2014 2015 2016 January - December Automotive industry exports represent more than oil products exports, remittances income and tourism income together. Automotive industry Oil products Remittances Tourism income Source: AMIA with INEGI - Grupo de Trabajo de Estadísticas de Comercio Exterior, integrated by Banco de México, INEGI, Servicio de Administración Tributaria and Secretaría de Economía, data. 7
Production value Vehicles and trucks production 55.4% national production 44.6% 28.8% 26.6% Added value Domestic inputs Imported inputs Source: INEGI. 8
Millones de unidades World Vehicle Production 30.0 25.0 2014 2015 2016 20.0 15.0 10.0 5.0 0.0 CHN USA JPN GER IND KOR MEX SPN CAN BRA Ranking 2016 Ranking 2015 Ranking 2014 Source: AMIA with OICA data. 1 2 3 4 5 6 7 8 9 10 1 2 3 4 6 5 7 8 10 9 1 2 3 4 6 5 7 9 10 8 9
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017^ 2018^ 2019^ 2020^ Million units Light Vehicles Production Forecast 2020 6.0 5.0 4.6 5.0 4.2 4.0 3.0 2.0 1.9 1.8 1.8 1.5 1.5 1.6 2.0 2.0 2.1 1.5 2.3 2.6 2.9 2.9 3.2 3.4 3.5 3.8 1.0 0.0 Source: AMIA. 10
NAFTA Region 11
NAFTA vehicle production Mexico 7% (1.08 million) Canada 15% (2.25 million) 1993 Mexico 20% (3.60 million) Canada 13% (2.37 million) 2016 United States 78% (10.9 million) United States 67% (12.20 million) NAFTA: 14.23 million vehicles. NAFTA: 18.17 million vehicles. From 1993 to 2016 production vehicle of NAFTA region increased 27.7%. In 2016 close to 19% of the vehicle world production was from the NAFTA region. Source:AMIA with Ward s Automotive and OICA data. 12
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NAFTA light vehicle sales 100% 90% 80% 70% Million vehicles 1993 2016 Change EE.UU. 13.9 17.5 26% Canadá 1.2 1.9 64% México 0.6 1.6 165% TLCAN 15.7 21.0 34% 4% 8% 8% 9% Sales per 1000 people Δ 1.1% Δ 30.2% 53 54 54 Δ 4.4% 43 41 41 Δ 88.4% 60% 50% 40% 89% 83% 1993 13 7 2016 1993 2016 1993 2016 1993 2016 US Canada Mexico NAFTA 30% 20% 10% 0% 1993 2016 US Canada Mexico Fuente: AMIA, Ward s Automotive amd World Bank. Population (Million people) 1993 2016 Change EE.UU. 259.9 323.1 24.3% Canadá 28.8 36.3 25.8% México 90.6 127.5 40.8% TLCAN 379.4 487.0 28.4% 14
US Light Vehicle Market US Light vehicle sales Country 1993 2016 Change Share 1993 2016 US & Canada 11,389,377 11,471,352 0.7% 82.0% 65.7% Mexico 352,772 2,133,724 504.8% 2.5% 12.2% Other 2,153,831 3,859,944 79.2% 15.5% 22.1% TOTAL 13,895,980 17,465,020 25.7% 100.0% 100.0% US Light vehicle sales (Jan - Nov) Country 2016 2017 Change Share 2016 2017 Germany 605,036 540,173-10.7% 3.8% 3.5% Japan 1,475,371 1,542,740 4.6% 9.3% 9.9% Korea 878,066 746,198-15.0% 5.6% 4.8% Mexico 1,964,441 2,147,771 9.3% 12.4% 13.8% Other 516,514 635,172 23.0% 3.3% 4.1% US & Canada 10,343,781 9,927,431-4.0% 65.5% 63.9% TOTAL 15,783,209 15,539,485-1.5% 100.0% 100.0% Source: Ward s Automotive Reports and AMIA. *By country of origin 15
Motor vehicle trade US US imports more motor vehicles from the NAFTA region than from Japan, Germany, Korea, China and the UK together. 2016 motor vehicle imports - US 2016 motor vehicle exports - US UK 4.3% Other 8.1% Korea 8.7% Germany 11.8% Japan 20.5% NAFTA region 46.6% UK 3.3% Saudi Arabia 4.5% Other 24.5% Germany 9.7% China 13.1% NAFTA region 44.9% Source: AMIA with USITC data. *NAICS 3361 Motor vehicles. 16
Autoparts trade US 76.5% of US autoparts exports goes to NAFTA region. US autoparts exports to China, UK, Japan, Germany and Korea represent 10.3% of the total. 2016 motor vehicle parts imports - US 2016 motor vehicle parts exports - US Germany 4.4% Other 13.1% Korea 5.9% Japan 9.7% China 12.1% NAFTA region 54.8% Japan UK 1.7% 1.9% China 3.8% Other 16.2% NAFTA region 76.5% Source: AMIA with USITC data. *NAICS 3363 Motor vehicles parts. 17
Considering the new investments, the forecast is that Mexico will be producing close to 5 million vehicles in 2020 (hard forecast). México 20% (3.60 millones) Canadá 13% (2.37 millones) 2016 Mexico 26% (5.0 millones unidades) Canada 12% (2.37 millones unidades) 2020 (estimado*) Estados Unidos 67% (12.20 millones) United States 62% (12.20 millones unidades) TLCAN: 18.17 millones de vehículos. 18
NAFTA modernization Market access Maintain free trade Mantain rule of origin Normativity Labor agreement Trade facilitation 19
T H A N K Y O U! Eduardo J. Solís Sánchez Executive President Asociación Mexicana de la Industria Automotriz (55) 5272-1144 esolis@amia.com.mx @AmiaMexico Asociación Mexicana de la Industria Automotriz ac 20