Mexican President-elect Claudia Sheinbaum will take over a country that produces 4.3 of the 100 vehicles assembled on the planet.
Mexico will have its first woman as head of state and government, but also parliamentary majorities from the same political party as the winner, which together with its allies can achieve qualified majorities in both chambers. A new political stage for Mexico demands the participation of citizens, businessmen, organized citizens and key sectors in the economy and trade. The Mexican automotive industry is ready to work with the president-elect.
Being the seventh global producer and the sixth exporter of light vehicles, the first producer of tractor-trailers, the sixth in passenger buses, the fourth producer of auto parts, was not a feat of two or three six-year terms, it was the achievement of various governments that knew how to combine the various links of automotive production.
A high point was the automotive decree of 1962 issued by President Adolfo López Mateos, which allowed the acceleration of the process of national productive chains, in addition to linking opportunities with the exterior. A faithful reflection of the import substitution process, this decree had another virtue: it generated confidence so that the new automotive brands that emerged from the global market would produce vehicles in Mexico. In other words, not only the iconic Detroit brands won, but also those from Germany and Japan, guaranteeing spaces for diversification for an industry that accelerated national manufacturing. Decades later, it displaced oil as the main generator of foreign currency for Mexico. In 2023 alone, the automotive sector generated 107,965 million dollars compared to 62.2 billion dollars of crude oil and 21.6 billion dollars of remittances. Without this industry, Mexico would have a considerable deficit compared to the United States.
The series of presidential decrees, forced or guided by global and regional events, enabled the industry to make the transition from import substitution to the automotive export model, which today allows more than 2.1 million Mexicans to work directly for the automotive world, generating the best salaries within national manufacturing.
NAFTA was achieved in large part due to the strength of the Mexican automotive sector, in addition to consolidating an enormous reality: productive interdependence to have the regional vehicle, consolidating 62.5 percent of components as a rule of origin, at that time one of the largest in global trade blocs.
The arrival of Donald Trump to the White House and the turbulence in the creation of the heir to NAFTA, the T-MEC, provided the opportunity to increase the regional content value of a North American vehicle to 75 percent, however, the new energy transition in electromobility arrived, which calls for a safe and integrative path as a region to strengthen competitiveness against China, primarily. Beyond nationalistic nostalgia that clouds an ideological cataract, the reality is that interdependence with northern neighbors is a card to strengthen Mexico’s economic capacity, in addition to expanding its development possibilities.
The president-elect of Mexico will receive a country that produces 4.3 vehicles of the 100 vehicles assembled on the planet. In addition to this, she will have a relationship that, in addition to bringing together the Ministry of Economy as the leading agency in the sector, dialogue with SHCP, Semarnat, Energy, Foreign Relations, Public Security, Segob, Health, among other agencies, is essential. The industry, which concentrates more than 250 productive and service branches, accounts for 4.7 percent of the national GDP, almost 22 percent of Mexico’s manufacturing exports, which is the main Latin American exporter (above Brazil) and is one of the largest contributors to the public treasury, needs a new dialogue with the federal government to build convergences at crucial moments in the global automotive industry, but also because of the demand to have a State approach to the review of the T-MEC in 2026.
The automotive industry, which is above relevant industries such as food, agriculture, mining or chemicals, seeks the creation of tax incentives, green stimuli and scrappage programs for the value chain. The very tax incentives proposed by the Biden administration in the United States were able to add Canada and Mexico for the sale and production of electric vehicles. If Washington had made these incentives impossible, there would have been a risk of an unprecedented weakening of the regional trade alliance, endangering the T-MEC itself. The next government must have virtue and creativity to update the agreement with the European Union, in which, due to the new political scenario, it can combine opportunities with the T-MEC.
In the discussion between experts in trade and economy, some show that what suits Mexico is a customs union with North America. If that logic is followed, the automotive sector would have to make a sincere analysis of the pros and cons. Rushing such a decision risks renouncing Mexico’s commercial sovereignty in its relationship with 13 other free trade agreements, including those with Japan and the European Community. The automotive sector in Mexico is diversified and the national consumer prefers Asian brands in terms of tastes and preferences. Elucidating opportunities and risks must be part of a serious and realistic debate. It is impossible to forget that there are no eternal investments and that a hypothetical exit of automakers from Mexican soil could have disastrous consequences for state or regional development, hence the need to work on new investments, but also to guarantee those that have been in Mexico for decades.
The development of infrastructure for recharging the energy source and corresponding technology; a normative and regulatory framework that provides certainty and encourages innovation, investment and transition, energy efficiency and demand management; the improvement, planning and optimization of public transportation systems; the development of green hydrogen for heavy transport; The development of an ecosystem for the manufacture of chips, semiconductors and printed circuit boards are some vectors of the automotive family that demand dialogue and responses between the links of the automobile and the government of the republic that will begin on October 1.
In light of the above, it is important to highlight that between 2006 and 2023 the automotive industry received 77,527 million dollars in Foreign Direct Investment (FDI), that is, almost 20 percent of the total that arrived in Mexico. FDI and national FDI, in the automotive sector, as in any productive economic sector, requires clarity in two columns: the efficient, sustainable and competitive energy flow, as well as certainty in the rules of the game that rest on a professional and autonomous Judicial Branch.
National futures in various branches seek to consolidate themselves in an agenda where the decarbonization of the economy, global relocation and innovation in education are pending development if they want to be successful. The emergence of China in the automobile industry, today the main supplier of new vehicles to the Mexican market, demands a reformulation of priorities for Mexico. Specifically, it is a time that will seek to redefine routes under an inclusive industrial policy, dialogue and joining of wills.
Another priority must be the internal market, often relegated in the face of automotive production and export data. Even so, the national automotive market is the 12th in the world, but with the deepening of a financial reform, combating automotive smuggling and well-defined programs in a public policy of renewal of the vehicle fleet in universes such as SMEs or small rural producers, it can strengthen internal possibilities and thus guarantee more and better jobs.
Mexico cannot continue being one of the main producers of heavy cargo and passenger vehicles, and maintain the incongruity of a vehicle fleet with an average life of two decades for heavy vehicles and more than 15 years for light vehicles.
El Financiero (June 17, 2024) reported that from 2019 to 2025, 2 million 587 thousand 954 units that were originally automotive contraband have been regularized. Mexico cannot become a large junkyard for its northern neighbor and the controversy of this practice that hurts the sense of legal certainty, in addition to the elements of energy efficiency, environmental care and road safety for all, including pedestrians, must be put into debate.
Dr. Claudia Sheinbaum, who, due to her academic training and her positions, is familiar with the importance of the energy transition, the value of mobility, electromobility and environmental protection, has a splendid opportunity to build a success story with the Mexican automotive industry, a story that provides space for a new era of growth and development.
Source: elfinanciero
