Via Wolf Street

Mexico’s global auto exports fall for first time since 2009. But share of Mexico-built vehicles sold in the US rises to record.

By Nick Corbishley, for WOLF STREET:

Hit by the global swoon in auto sales, Mexico’s exports of cars and trucks to the rest of the world fell by 3.4%, to 3.3 million units in 2019, the first annual decline since 2009. Exports to Europe plunged.

The U.S. imports eight out of 10 cars and trucks that are assembled in Mexico. Over the first nine months of 2019, auto imports from Mexico grew at 8% year-over-year. But in Q4, imports suddenly plunged 11%, according to data from the Mexican automotive industry association AMIA (released by the National Institute of Statistics and Geography INEGI). In December alone, auto imports tumbled 16.7%. The year-end swoon slashed year-total growth of imports from Mexico to just 2.9%, the smallest increase in over a decade. In 2019, the US imported 2.64 million vehicles from Mexico:

The multi-year surge of vehicles imported from Mexico into the US occurred even as new-vehicle sales in the US have fallen for three years, including 1.2% to 11.1 million vehicles in 2019, the lowest since 2014, and below where they’d been in 2000. This increased the share of Mexico-built vehicles in 2019 to a record 15.5% of total US sales, up from a share of 10.5% in 2013.

Mexico’s auto industry is worried. Over the past decade-and-a-half, it has enjoyed the benefits of non-stop growth, largely based on exports to the US. Between 2011 and 2018 the total number of vehicles sent to the U.S. from Mexican assembly plants surged by 93%, rising every single year, sometimes by double-digit percentages, including 13.9% in 2014. Even in 2015, the worst year until this year, the total imports still grew by 6.3%.

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These increases happened even as the U.S. car market has been declining for the past three yeas. But now the impact is being felt south of the border.

Of the 12 global automakers with plants in Mexico, seven reduced their shipments to the U.S. in 2019. For Q4, the data is even grimmer with 10 out of the 12 automakers reducing their shipments from Mexico to the US. The companies that cut back the most were:

  • Mazda’s imports from Mexico plunged 55% over the course of the year, to 26,177 units.
  • Audi’s imports from Mexico dropped 19%.
  • Nissan’s imports fell 11%. In the last quarter of 2019, Nissan’s imports from Mexico tumbled over 30% year-on-year.
  • Chrysler, whose imports from Mexico dropped 11% year-on-year, to 450,000 units. Like GM, Fiat Chrysler has hugely expanded its Mexico operation over the last nine years, increasing its total annual imports from Mexico by over 200%, to 504,793 units in 2018. But last year the trend began to reverse.
  • Ford slashed its imports from Mexico by 66% year-on-year in the last quarter of 2019. In the first three quarters of 2019 its total imports from Mexico had risen 18% before collapsing, due largely to the Ford’s decision to phase out several car lines — most of them assembled in Mexico.

There were three big exceptions:

  • Honda, whose U.S. imports from Mexico increased 20% year-on-year between October and December and 46% over the whole of 2019.
  • Volkswagen, which increased its imports from Mexico to the U.S. by 32% year-over-year, with its car models up 36% to 146,792 units and its Tiguan SUV model up 27% to 118,046 units.
  • General Motors, the biggest outlier of all. No company has bet as heavily on Mexican production as GM. In 2019, the company imported a grand total of 766,165 cars and trucks from Mexico, up 15% on 2018 and 140% on its 2011 total. That was despite UAW’s 40-day strike, which prompted GM to idle its plant in Silao, Mexico, that accounts for roughly half of its entire Mexican output. A staggering 99% of the vehicles GM imported from Mexico in 2019 were SUVs, compact SUVs, and pickup trucks.
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For most automakers in Mexico, 2019 was a tough year. New vehicle sales in the domestic market slumped 7.5%, the worst contraction since the Global Financial Crisis.

Mexico’s auto industry is also tangled up in the current global slowdown in auto demand, with total auto exports falling by 3.4% to 3.3 million units in 2019, the first annual decline since 2009.

“It’s not a matter of the plants’ capacity, it’s about how much of this production the market is absorbing,” departing AMIA president Eduardo Solis told a news conference. “We’re seeing major falls at a global level.”

There were sharp drop-offs in exports to other countries: Canada (-12.5%), Brazil (-34.4%), Chile (-34.5%), Peru (-19%), Germany (-8.5%), Spain (-52%), Italy (-29%), and France (-50%). Exports to Europe as a whole were down by 18.9% from 248,000 vehicles to 201,000 vehicles, a reflection of the decline in auto sales in much of Europe. By Nick Corbishley, for WOLF STREET.

But not all automakers in the US had falling sales. Here are the top automakers in charts. Read… US New Car & Truck Sales in 2019 Fell Below Year 2000 Level, 3rd Year in a Row Below 2016 Peak

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