Sector briefing

Automotive opportunities in Mexico

Why Mexico?

Mexico is one of the ten largest automobile, truck, auto-parts and components manufacturers in the world. The Mexican industry exports 75% of its production. In Mexico companies manufacture: Passenger vehicles. Commercial vehicles. Parts and components for original equipment. And spare parts. The automotive industry is comprised of: 8 light vehicle manufacturers. 12 heavy vehicle manufacturers. 1,100 auto parts manufacturer. Mexico Offers a Very Attractive Business Environment. One of the lowest country risks. Low costs. Provider of outsourcing services and manufactured products. Qualified staff. Automotive companies. Mexico has signed 12 trade agreements and treaties with 44 countries, which represent 15 percent of the worlds population. In addition, the Mexican legal and political systems favour the development of new businesses and offer a safe legal environment for investment. You can find general information on the Mexican market conditions on UKTIs website. The Doing Business Guide for Mexico gives an overview of Mexicos economy, business culture, potential opportunities and an introduction to other relevant issues.

The US$ 4.5 Billion Investment to manufacture the new Ford Fiesta in Mexico positions Mexico as a potential producer of global cars.

UK Trade & Investment Sector briefing: Automotive opportunities in Mexico

Opportunities
Major investments by key automakers and new free-trade activity are triggering the expansion. Automobile suppliers now see Mexico as a viable production centre for the whole of North America. Mexico has become an even more attractive opportunity for investment because the plants located in the country cover the rules of origin within NAFTA and for Europe as well as having preferential export arrangements with other regions, in particular South and Central America. Mexico's multiple trade agreements, which are with nations that in aggregate represent 60 per cent of the world's trade volume, are providing automotive manufacturers in Mexico with increased flexibility and cost savings when trading goods in and out of Mexico, with the United States, the EU and its other trade partners. Mexico's network of Free Trade Agreements (FTAs) has become a powerful incentive for leading auto producers to establish operations in the country. Mexican content in automotive products is the key to accessing 32 markets in three continents with 680 million consumers, under preferential conditions. The auto parts sector in Mexico consists of approximately 1,100 companies where 70 percent are foreign capital companies and 30 percent remain national. From this total, 350 produce first tier products while the remainder supply raw materials to second and third tier suppliers. Companies present in Mexico in the light vehicle category are: VW, Ford, GM, Chrysler, Honda, Nissan, BMW and Toyota. Global assembly plants are being relocated to Mexico. High demand components. Engineered parts for diagnostic and assembly equipment: Braking systems. Electrical components. Transmission and engine components. Stamped steel parts steering assemblies. Interior trims and light weight alternative metals. In Mexico, there are over 1,000 suppliers in the automotive industry, 560 of which are Tier1 and 500 are Tier2 suppliers.

There is a high concentration of automotive suppliers in mid and north western Mexico. Opportunities for Tier 1 & 2 There is a significant demand for raw materials used in the manufacture of the following spare parts and components: OEM parts & components. Hybrid vehicle components. Materials. Stampings. Electronic components. Equipment and specialised tooling. High Technology Key opportunities in which the UK has experience include: High tech components. Application of motor sport technology. High-end manufacturing and design automotive engineering. Technologies related to hybrids will have better opportunities in Mexico. Hybrids are expected to account for 10% of Mexicos fleet by 2018. Market Prospects There is excellent market potential for exporters in the aftermarket sector: electrical systems, panels, windshield wipers, transmission and engine assembly. Other key aftermarket products include: Rims. Stereo and CD/radio equipment. Alarm and security systems. Special shock absorbers. Rims. Tail lights. Floor mats. Pick-up truck accessories and automotive tools and boxes as well as collision repair parts, catalytic converters, steering wheels and sound systems and generally most types of accessories. Regarding manufacturing in the automotive sector, Mexico has a competitive disadvantage in the production of certain materials, particularly steel plates, plastic resins and any material that requires high-tech processes.

UK Trade & Investment Sector briefing: Automotive opportunities in Mexico

The state-of-the-art manufacturing facilities established in Northern and Central Mexico have contributed to the modernisation of the sector and to regional development. Highly specialised clusters have also been developed around the major auto industrial plants through the establishment of hundreds of new suppliers that promote vertical integration and strengthen supply chains. The auto and auto-part industry has played a vital role in Mexico's economy, with its 19% share in total exports, 24% of the country's manufacturing GDP, and employing more than 1.9 million people. It is now serving as the engine for increasing economic activity and providing prosperity. Mexico is currently one of the ten largest automotive manufacturers in the world. Mexico is projected to rank fifth in 2011, competing with stronger economies such as India, the United States, China and Slovakia. It is highly recommended to take part in trade fairs and exhibitions. They are good tools with which to approach the market. At the end of this report you will find a list of the major exhibitions related to the automotive sector in Mexico. If you have any questions regarding the opportunities above, please contact the UKTI contacts named in this report. Business opportunities aimed specifically at UK companies are added daily to UKTIs website. These leads are sourced by our staff overseas in British Embassies, High Commissions and Consulates, across all sectors and in over 100 markets. You can be alerted to business opportunities on a regular basis by registering on the UKTI website. Find out more on UKTIs business opportunities service on the UKTI website

UK Trade & Investment Sector briefing: Automotive opportunities in Mexico

Major events and activities

CIIAM 2011 & Expo-INA INTERNATIONAL CONGRESS OF THE AUTOMOTIVE INDUSTRY IN MEXICO Contact: Alejandro Moreno. Email: amoreno@ina.com.mx, Time: April 4-8 2011 www.ina.com.mx TECMA Contact: Juan Pablo Vzquez Enciso Email: jpvazquez@tecma.org.mx, info@tecma.org.mx Time: March 8 to 11, 2011 www.tecma.org.mx Expo Proveedores del Transporte 2011 Contact: J&D Organizacin de eventos Email: info@expoproveedores.com.mx Time: May 18 to 20, 2011 www.expoproveedores.com.mx PAACE AUTOMECHANIKA Contact: Kristen Woodburn Email: kristen.woodburn@usa.messefrankfurt.com Time: July 13-15, 2011 www.paaceautomechanika.com EXPO INTERNACIONAL RUJAC Automotive-Parts and Spare Equipment Contact: Mnica Daz F. Email: mercadotecnia@rujac.com.mx Time: September 7 to 9, 2011 www.rujac.com.mx Mexico Now- Autoindustry Conference Email: information@mexico-now.comTime: September 2011 www.mexico-now.com Find full details of all events in this country and sector on the UKTI website. New export events are added daily to the site and you can register to be alerted to them on a daily, weekly or monthly basis. UKTIs Tradeshow Access Programme (TAP) provides grant support for eligible Small & Medium Sized Enterprises (SME's) to attend trade shows overseas. Find out more about UKTI support for attendance at overseas events

UKTI contacts
Jonathan C. Clare Consul British Consulate Monterrey Tel: +52 (81) 8356 5359 Email: jclare@ukconsulate.org www.ukti.gov.uk Itzel Hernndez Trade and Investment Officer British Consulate Monterrey Tel: +52 (81) 8356 5359 Email: ihernandez@ukconsulate.org www.ukti.gov.uk Alejandra Rodriguez Trade and Investment Officer British Consulate Monterrey Tel: +52 (81) 8356 5359 Email: arodriguez@ukconsulate.org www.ukti.gov.uk Dario Ochoa Trade and Investment Officer British Consulate Monterrey Tel: +52 (81) 8356 5359 Email: dochoa@ukconsulate.org www.ukti.gov.uk

UK Trade & Investment Sector briefing: Automotive opportunities in Mexico

Next steps How UKTI can help

British companies wishing to develop their business in the Mexican market are advised to undertake as much market research and planning as possible in the UK. UKTIs team in Mexico with its wide local knowledge and experience can provide a range of services to British-based companies wishing to grow their business in global markets. This can include: Provision of market information Validated lists of agents/distributors Key market players or potential customers in the Mexican market Establishment of interest of such contacts in working with you Arranging appointments Organise seminars or other events for you to meet contacts and promote your company in the Mexican market

This work is available via our Overseas Market Introduction Service (OMIS) a chargeable service which assists British-based companies wishing to enter or expand their business in overseas markets. To find out more about commissioning this work, or accessing other UKTI services and specialist advice, please visit the UKTI website to find contact details for your local UKTI office.

Whereas every effort has been made to ensure that the information given in this document is accurate, neither UK Trade & Investment nor its parent Departments (the Department for Business, Innovation & Skills, and the Foreign & Commonwealth Office), accept liability for any errors, omissions or misleading statements, and no warranty is given or responsibility accepted as to the standing of any individual, firm, company or other organisation mentioned. Published 2011 by UK Trade & Investment. Crown Copyright

Published 2011 by UK Trade & Investment. Crown Copyright 2011 You may reuse this information (not including logos, images and case studies) free of charge in any format or medium, under the terms of the Open Government Licence. To view this licence, visit www.nationalarchives.gov.uk/doc/open-government-licence/ or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gsi.gov.uk This publication is also available from our website at www.ukti.gov.uk or for more information please telephone +44 (0)20 7215 8000.

UK Trade & Investment Sector briefing: Automotive opportunities in Mexico