Mexico’s auto parts industry expects production value to rise 10% to $24.8 billion in 2005, driven by new supply contracts with US automakers and robust car production rates, just-auto has been told.
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Cesar Roi, spokesman for Mexican part makers federation Industria Nacional de Autopartes (INA) said that the industry has won new supply deals with US-based Japanese manufacturers.
Car production is forecast to rise 5% to 1.26 million units this year, fuelled by a buoyant domestic market where sales are seen increasing 3% to 800,000 units, Roi added. The industry has also forecast output value growth of 8% in 2006.
“We are diversifying our customer base. Before, most of our contracts where with GM, Ford and Chrysler,” Roi noted, adding that the sector’s expansion drive has transformed it into the No.1 component supplier to the US after Japan.
The industry is suffering form soaring raw-material prices, however.
Steel prices rose 45% in 2004 while aluminium and plastic prices also increased. The industry is offsetting the cost hikes through volume increases but the situation is unsustainable long term. The industry has asked the government for help and there are hopes that the state will provide fiscal incentives for materials procurement, Roi, who is also an automobile analyst, noted. He was speaking on the sidelines of Mexico’s CIIAM international automobile congress, which ended July 12.
During the event, the US-based Motor & Equipment Manufacturers Association (MEMA) praised Mexico for its efficient and low cost components industry. It said US part makers are poised to sharply increase their Mexican investments and that companies on both sides of the border must do more to boost synergies to save costs and overcome market challenges.
Ivan Castano
