Mexico’s sluggish auto industry could start to recover by early 2005 as US demand begins to increase, the chairman of General Motors’ Mexican unit reportedly said on Tuesday.

“I think we’re entering a recovery period as long as the market in the United States starts to recover, and it is already doing so. That’s going to have a positive impact,” Arturo Elias, head of GM Mexico, told Reuters.

The news agency noted that Mexico’s auto sector has suffered in recent years from a drop in demand from its northern neighbour, with production down 8.2% in the first six months of 2004 compared with the same period in 2003 – more than 80% of vehicles made in Mexico are exported with the majority going to the United States.

Elias reportedly said he saw GM’s Mexican unit producing 450,000 vehicles this year, slightly below the 471,619 vehicles produced in 2003.

“Our production and exports are in line with expectations,” Elias told Reuters.

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Other major foreign car companies operating in Mexico include Ford, Toyota, Volkswagen, DaimlerChrysler and Nissan, the news agency noted.