Mexico will displace Japan in auto parts production: INA

The disruption of global production chains after the pandemic, the increase in regional content marked by the T-MEC and the nearshoring boom will lead Mexico to position itself as the third largest producer of auto parts in the world, surpassing in the coming years Japan, said Francisco González, president of the National Auto Parts Industry (INA).

Starting in 2020, Japanese automotive companies were affected by the closure of manufacturing in Asia and the increase in logistics costs, so now, businessmen from that nation have accelerated their transfer of suppliers to the North American region to create a supplier base, located mainly in the Bajío of Mexico.

The production of auto parts in Mexico will reach more than 106,600 million dollars at the end of 2022, which would represent an increase of 12.65% compared to what was observed in 2021. Meanwhile, the trend in Japan has been downward, as well as that of Germany and South Korea, other countries that supplied the Mexican and US markets.

The route of the future for the automotive and auto parts industry allows this transformation that we are experiencing, opens up the possibility of reaching positions of greater leadership in mobility. That is an ambitious goal, but it is achievable, ”he commented in an interview.

The president of the INA recognized that Mexico is still far from the figures that Japan maintains, which in 2021 had a turnover of 172,000 million dollars, but with the business strategy that they have adopted to locate suppliers of vehicle parts and components that can serve the plants that operate in Mexico, the United States and Canada, the gap will be reduced.

If the value of production in Mexico maintained a growth rate of at least 10% per year for the next five years and Japanese production remained unchanged, it would take Mexico five years to catch up.

Companies such as Toyota, Mazda and Mitsubishi are preparing for the transfer of suppliers from Japan or China to Mexico and the United States, to supply themselves more efficiently and at lower costs.

Francisco González envisions a “prosperous” outlook for the auto parts industry in Mexico, “it will continue to be positive for the coming years, since auto parts production is estimated to reach 108.874 million dollars in 2023, while in 2024 it will exceed the threshold of the 110,000 million dollars, reflecting an unprecedented growth of the national industry”.

He explained: “we have just surpassed Germany and we are on the path to continue growing. It is impressive for the following years, we grow and the others not so much, like Japan”.

Although there is no estimated period to surpass the next competitor, “you have to work because the world is happy with the quality of what Mexico does,” highlighted the president of the INA.

Recently, Jorge Vallejo, president of Mitsubishi Motors México, pointed out that as a result of the disruptions in the supply chains experienced since 2020, the need to locate Japanese suppliers in Mexico has become visible.

It establishes a supplier base that can supply spare parts and accessories to the Mexican market, as well as to Latin America. In addition to parts that are directed to North America.

Electromobility, underway

Francisco González commented that the companies that are “landing” in Mexico are focused on electromobility, the development of software and fluids, as well as new components to connect the battery of electric cars.

The Jetro agency of Japan, which promotes international trade, reported that it promotes the link and knowledge about potential Mexican auto parts suppliers towards Japanese companies established in Mexico or those established in the United States or Japan, through the diagnosis of potential Mexican suppliers. and its subsequent dissemination in a database with exclusive access to buyers of Japanese companies.

“The objective is to promote the competitiveness of Japanese companies in the automotive sector located in Mexico, through the development of Mexican suppliers”, for which they defined products to be strengthened such as harnesses, rubbers, machining, textiles, forging, springs, molds and dies, among others.

“The T-MEC is impressive, now we need 75% regional content and many have to come to produce here. With world conflicts, the world is regionalized and makes them come to produce more here. The most important factor is the Mexican talent, quality and productivity in the automotive sector”, asserted the president of the INA.

lilia.gonzalez@eleconomista.mx