subject: Mexican Auto~car Market~marketplace Snapshot [print this page] After two consecutive years of declines in sales, the market registered 3.3% fewer vehicles, to 188,944 units, during Q110, meaning that domestic sales are yet to bottom out. Provided that we expect need in 2010 to be assisted by the base effect from 2009 product sales, we forecast sales to develop by just more than 6% y-o-y, to 834,000 units, by 2010. However, impeded by an expected slowdown within the US financial activity in 2011 and the proposed tax hikes domestically, we anticipate autos sales to recover to one.12mn units through the finish of 2014, having only partially recovered from the 1.14mn models sold in 2007.
Recuperation in autos manufacturing, however, is most likely to be quicker, as we expect carmakers to increasingly concentrate on exports to drive up their capability utilisation. Following a close to 10% y-o-y increase in manufacturing, to one.73mn models in 2010, we anticipate production to achieve 2.33mn models by the end of 2014. We believe that a main assistance to this level will arrive from targeting much more growth-promising markets in Latin American and Asia.
Indicators of these already surfaced last year when India's Tata Motors, in partnership with nearby manufacturer Grupo Autofin, announced plans to produce its ultra-low-cost Nano model in Mexico from 2012 with the view to supply its vehicles within the Latin American market. Meanwhile, Honda Motor, in November last year, created an investment of US$6mn inside a production line at its El Salto plant to help assemble its new CR-V sport utility automobile (SUV) at the plant. Indeed, this kind of investments have helped Mexico rank in the third placement in BMI's regional ratings this quarter.
BMI points out that an additional benefit to Mexico from such expansions will be the emergence of an integrated supplier base, in the presence of both local and global suppliers. Having built powerful associations with international clients, most Mexican companies are venturing for worldwide recognition and expertise through acquisition of businesses of their competing international firms. Metalsa and Katcom present stand as the best example from the trend.
Although the Mexican autos business association AMIA has known as for the government to introduce regulations and incentives to encourage new vehicle product sales, BMI stresses that improved autos financing provides the very best feasible assistance for recovery in the country's autos demand.
by: Emma Watson.
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