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The automotive industry is moving slowly towards recovery, however the crisis due to the shortage of semiconductors It is representing not only driving uphill but also doing it with the parking brake activated.
To know the level of the situation in the sector, engineer Oscar Albin, explained in an interview for El Economista, what are the main challenges facing the national auto parts industry and their expectations for 2022.
─ What is the situation of the auto parts sector compared to 2020 at annualized figures?
They are very equivalent, it must be taken that the market for the auto parts industry in Mexico is in new cars that are manufactured in Canada, the United States and Mexico, that is, it is not only about the factories that are in Mexico because the 96% of what we manufacture ends up in these three countries. In the American continent, in normal pre-pandemic times, between 16 and 17 million vehicles are always manufactured, that is our market in which we are with the installed companies producing 100 percent. Last year 13.5 million were produced for the 3 or 4 months that we were closed.
This year, when we expected to return to the 16.5 million vehicles produced, we had to face this second problem of chips. Due to all the stoppages that have had to be made in 2021, we will close over 13.5 million units produced. This reference is useful if 2021 is compared with 2020 and it will show that they are equivalent due to the Covid-19 contingency and the loss of chips. Both are well below the capacity we have of 16.5 million new units manufactured that was reached in 2019.
─ What is your forecast for the sector in 2021?
My expectation is that we will be finishing on the 78 billion dollars of production, a level lower than the results obtained in the prepandemic period, which we walked over 98,000 million.
However, let’s hope that next year we will have the semiconductor issue fairly resolved and we can begin to return to the 16 or 17 million cars produced with which we would be returning to the 100 billion dollars of manufacturing.
─ What is the average number of semiconductors that a car requires?
The average number of semiconductors used by a vehicle depends on the type and applications it has, but they are between 200 or 300 semiconductors. There are different types such as remote connection to make the link with other systems, and others that operate the required mathematics.
─ What are the problems to be solved in the auto parts industry?
Lack of semiconductors It is the main pending, but not the only one. It is the main one because it is the one that is giving the guideline to the manufacturers of the production capacity because although they have the capacity to produce 100 but they only have 80 semiconductors, they will only produce 80 cars.
But there are also others such as the unusual increase in the cost of raw materials and logistics, which makes some vehicles that have a very marginal profit margin because they restrict their manufacture, in the first place because raw materials rose and the margin is cut. or it could even be negative, and on the other hand, if you do not have enough chips, it is better to produce what does generate profit, even if it is higher volume, but which can lead to serious financial complications.
─ What are the actions implemented by INA to counteract the effects of this crisis?
We are giving society and the government an understanding of what this problem is about, how it can be solved at the continent level, where Mexico can participate and who could be the actors. We learned that in the stages of manufacturing a semiconductor, the first is to physically manufacture it and for this multimillion-dollar investments are required, a lot of electricity and large amounts of water, and Mexico is not the best fertile field for these three factors.
For example, we do not have the appropriate fiscal policy to quickly deduct all capital income compared to the United States, in addition to the fact that electric power is twice what it is worth in the southern United States and finally the availability of We could probably have water available in the south of Mexico but in the north, which is where the productive and scientific force is, as there is not much.
For this reason we believe that this first phase will be carried out in the United States because they have all these advantages, and the second phase, which is the programming of the mechanical or generic semiconductor, can be done in Mexico with less sophisticated equipment, with less capital investment and especially since we have enough human talent.
— Is the lack of microprocessors impacting the final price of vehicles?
There is definitely an increase in costs. Today semiconductors have a higher value than they had 3 years ago. But it is not only about this, but the impact on costs that the automotive industry in general is having is more for the rest of the raw materials than for the semiconductors. For example, steel has increased its price three times, followed by aluminum, copper, plastic resins, so basically the basic raw material that a car has has multiplied in costs. The prices of the vehicles are adjusted according to the demand of the buyers. Cars will be going up and they will be able to go higher not so much because of the chips but because of the rest of the raw materials that greatly impact the car.
— When could this situation be reversed?
—The best forecast is that we begin to recover in the second half of 2022, which would be the start of operation of some factories that, prior to the Covid-19 pandemic, were already investing in this sector (microprocessors).
And let’s hope that the demand for semiconductors by other markets, such as the telephone, has already normalized so that the manufacturing capacity can be used for automobiles. But if the demand for cell phones with 5G technology continues to multiply in different countries, we will continue with this problem since phone manufacturers are the main devourers of semiconductors.
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