Mexico reports stable auto production in 2018

Automobile and light truck assembly in Mexico held nearly steady in 2018, according to statistics released by the Mexico City-based Asociación Mexicana de la Industria Automotriz (AMIA).

The AMIA has calculated Mexican assembly plants produced slightly more than 3.9 million vehicles in 2018, down by 0.6 percent from the 3.93 million assembled in 2017. Of those 3.9 million cars and light trucks produced in 2018, more than 3.4 million, or 88 percent, were exported, predominantly to the United States.

Car and truck buyers in Mexico purchased fewer vehicles in 2018, with the yearly total of slightly more than 1.42 million representing a 7.1 percent drop from the 1.53 million vehicles purchased in 2017. The AMIA says slightly more than one-third of vehicles purchased in Mexico were made there, while nearly two-thirds were imports.

The auto sector in Mexico is off to an uncertain start in 2019, with management-labor disagreements leading to a strike at several facilities in northern Mexico.

A late January online article from Reuters says the strikes are “have affected 45 plants since they began” on Friday, Jan. 25. The epicenter of the standoff is in Matamoros, across the border from Brownsville, Texas.

The Reuters report cites Luis Aguirre, president of an export manufacturers organization called INDEX as saying the work stoppages are costing the auto sector an estimated $50 million per day in unfulfilled contracts and sales orders.

The labor situation notwithstanding, the AMIA says it expects modest growth in the economies of the Central and South American regions in 2019. “Economies in Latin America and the Caribbean will grow 1.7 percent in 2019, in an international scenario with greater uncertainties,” states the group, citing a forecast by the Comisión Económica para América Latina y el Caribe (CEPAL) of the United Nations.

CEPAL cites “structural weakening of international trade, aggravated by trade tensions between the United States and China” as a factor that will have an impact on the growth of the economies of Latin America and the Caribbean.

The agency predicts the economies of Central America (excluding Mexico) will grow by 3.3 percent in 2019, faster than those in the Caribbean (2.1 percent) and South America (1.4 percent). At the country level, predicted fast growers include the Dominican Republic at 5.7 percent and Panama at 5.6 percent. At the other end of the spectrum are chaotic Venezuela, with its gross domestic product (GDP) expected to shrink by 10 percent, and Nicaragua (-2 percent), where long-time president Daniel Ortega is serving as a disincentive to foreign direct investment.

As for the region’s largest economies, CEPAL predicts 2.1 percent GDP growth for Mexico in 2019; 2 percent growth for Brazil; and -1.8 percent growth (contraction) in Argentina.

The AMIA adds concerning its home country, “The expectations of specialists in private sector economics, consulted by the Bank of Mexico in its December 2018 survey, show an expectation of annual GDP growth of 2.14 percent for 2018 and 1.89 percent for 2019. Analysts point to the main factors that could hinder economic growth in our country: 1) internal political uncertainty; 2) problems of public insecurity; and 3) lack of rule of law.”