Mexican auto production rose 8.1% year on year last month to 214,589 vehicles as export demand rose, the Mexican Auto Industry Association said.

Mexico is a key source of vehicles for the US and Canadian markets while some VW models made there are exported globally. The country also has a free trade agreement with Brazil.

Officials from AMIA , as the trade group is known, said at a press conference that total exports last month rose 15.5% to 167,497 units, Down Jones reported.

Exports to the US rose 8% to 116,944 units, exports to Europe increased 11% to 21,165, and exports to Latin America jumped 30% to 11,955 units, according to AMIA.

Though US and European economies appear headed into recession, Banamex economist Lourdes Rocha attributed export growth to auto makers boosting production of newer models that were in high demand, such as Volkswagen ‘s [Jetta ] Sportwagen and General Motors’ Saturn Vue, as well as a greater diversification of exports to markets other than the US, the news agency said.

On the other hand, Mexican domestic car sales had their worst month since 1998, falling 14.3% to 83,306 units in October, according to auto distributors’ association AMDA.

AMDA president Jose Gomez Baez told Down Jones that sales were suffering from weak economic growth, low consumer confidence and tightening credit conditions.

Banamex’s Rocha said the peso’s sharp depreciation against the dollar last month was another factor that probably hurt sales, given that imported cars account for about 55% of new car sales.

Mexican auto output during the first 10 months of the year rose 5.8% year on year to 1.8m units while domestic sales were down 3.4% at 845,670 units, the report added.