Mexico Poised to Surpass Japan as Source for US Auto Imports
Japan has ranked amid the top two auto exporters to the United States aback the 1970s, aircraft Toyotas, Hondas and Nissans added than 5,000 afar above the Pacific.
The Asian nation is assertive to be eclipsed this year by Mexico, which as afresh as 1990 beatific beneath than a division of a actor cartage above its arctic border.
Mexico’s account will ability 1.9 actor in 2015, topping Canada as the better exporter of cars to the world’s better economy, adviser IHS Automotive estimated.
Mexican auto exports to the United States added than quadrupled from 1993 to 2013 as achievement about tripled, buoyed by lower tariffs beneath the North American Free Barter Agreement.
Three bulb openings in four months — by Nissan Motor Co., Honda Motor Co. and Mazda Motor Corp. — will accumulation the final advance for Mexico’s bound accomplished Japan, which as afresh as 2008 alien about alert as abounding cars to U.S. consumers.
“It’s absolutely a bargain abode to aftermath and there’s a lot of abundance with the ability of the workforce in Mexico,” said Ron Harbour, a accomplishment analyst and accomplice at adviser Oliver Wyman. “In the backward 80s and aboriginal 90s, what was advancing in from Japan was cutting compared with what we anticipation about from Mexico aback then. Obviously, things accept changed.”
Cranking out baby cars such as the Honda Fit and Nissan Sentra, the fresh factories will addition Mexico’s allotment of the $150 billion U.S. acceptation bazaar for commuter cartage and ablaze trucks.
Made-in-Mexico autos awash in the United States will ability 1.69 actor this year, topping the 1.51 actor Japan-built vehicles, estimated Guido Vildozo, an IHS Automotive analyst based in Lexington, Mass.
By 2015, U.S. sales of autos from Mexico may ascend to 1.9 million, topping Canada’s 1.87 million, Vildozo said.
“Passing Japan as a U.S. supplier has been in the works for absolutely some time, decidedly aback the Mexican bulb announcements a few years back,” Vildozo said. “It looks like there’s a achievability Mexico may canyon Canada abutting year.”
For Mexico, the acceptation of growing exports goes above aloof rights over accomplishment prowess. Autos, trucks and genitalia accounted for 19 percent of Mexican exports during 2013’s aboriginal 10 months, up from 17 percent a year earlier, the Mexican Automobile Industry Association reported.
The industry has developed so ample that it generates added adopted barter than oil or money beatific home by Mexicans active abroad.
The leash of fresh plants abandoned will addition Mexico’s anniversary auto accommodation by about 600,000 cartage during the abutting several years.
By 2018, Mexican accumulation is projected to beat 4 actor from aftermost year’s 2.93 million, according to LMC Automotive. The Troy, Mich.-based close estimates that U.S. achievement was 10.9 actor in 2013, including 3.6 actor from Japanese automakers. Added Japanese-owned plants in Mexico will added abate the charge to address cars above the Pacific.
A Mazda3 auto this ages was the aboriginal car to cycle off the accumulation band of a bulb in Salamanca for the Hiroshima, Japan-based automaker, which is spending $770 million.
Mazda eventually will body cars there for Toyota, too. Honda’s $800 actor branch in Celaya will activate accumulation accumulation of the Fit abutting month. Nissan, No. 1 in Mexico by achievement and calm sales, opened a $2 billion bulb in November in Aguascalientes. It’s additionally allotment amid the United States and Mexico as a abode to body added Infiniti affluence models.
The accessories are allotment of automakers’ commitments to $9.6 billion in Mexican investments aback the alpha of 2011, according to the Center for Automotive Research in Ann Arbor, Mich.
Non-Japanese automakers are additionally accretion exports from Mexico, led by assets aftermost year of 35 percent at Ford and 13 percent for GM. Fiat S.p.A. CEO Sergio Marchionne catholic to Mexico to accessible a $1.1 billion bulb authoritative the Ram unit’s ProMaster account van.
Companies are demography advantage of branch affection that’s commensurable to the United States, said David Sargent, all-around automotive carnality admiral at adviser J.D. Power & Associates.
Mexico boasts activity costs at 20 percent of U.S. levels and barter deals accoutrement added than 40 countries, according to Luis Lozano, advance automotive accomplice at PricewaterhouseCoopers in Mexico City.
NAFTA helped set abounding of those barter accords in motion as Mexico approved broadcast bartering links abroad.
The country’s exports soared added than sevenfold, to $380 billion in 2013, from 1993, the aftermost year afore NAFTA took effect.
U.S. exports to Mexico are up as well. Aftermost year’s absolute through November, the best recent accessible figures, was $208 billion, or about bristles times as abundant as for all of 1993, according to the U.S. Census Bureau data.
Exports to Mexico about angled as a allotment of the U.S. abridgement in that 20-year period, based on abstracts aggregate by Bloomberg.
Mexico accounted for 18 percent of North American auto achievement in 2013, compared with 11 percent in 2000 and 6.5 percent in 1990, said Dennis DesRosiers, admiral of DesRosiers Automotive Consultants Inc. in Richmond Hill, Ontario. He said that allotment may ascend as aerial as 25 percent in 2020.
“Mexico should be able to get a bigger allotment of the pie, a abundant bigger piece,” DesRosiers said. “It’s about as abiding a affair as you can get that Mexico is activity to consign added cartage to the U.S. bazaar than Japan will this year. The alone affair that could bandy a bend into that is the yen.”
Auto factories booty years to build, so compassionate the Mexico bang in ablaze of bill moves requires some perspective.
While the yen has attenuated aback 2012, it’s still stronger than it was best of the time from 1996 through 2007. Even as Japanese Prime Minister Shinzo Abe’s budgetary abatement advised on the yen in 2013, the bill acquired 1.8 percent adjoin the dollar in the decade concluded in December.
Over the aforementioned period, Canada’s dollar rose 22 percent adjoin the dollar, while Mexico’s peso slid 14 percent — furthering Mexico’s advantage. That about-face helped accomplish Mexico adorable to Japanese automakers and others, as Canadian operations became added expensive. Mexico is already the No. 1 adopted supplier of car genitalia to the U.S.
Canada’s advance over Mexico charcoal better in the dollar amount of auto exports. During 2013’s aboriginal 11 months, the best recent abstracts available, Canada’s $40 billion topped Japan’s $34.4 billion and Mexico’s $28.8 billion, U.S. Commerce Department abstracts show.
Factories in Canada body added big models such as the Cadillac XTS sedan, Lexus RX 350 SUV and Chrysler Town & Country minivan. While abate cars still predominate in Mexico, higher-value cartage are on the way.
Volkswagen AG’s Audi assemblage will accessible Mexico’s aboriginal luxury-car bulb in 2016 to accomplish Q5 SUVs, abacus to the consign flow.
In 2013, the amount of Mexico’s auto exports to the U.S. rose 14 percent through November, compared with declines of 4.3 percent for Canada and 0.6 percent for Japan.
“They haven’t bent Canada in dollar agreement yet,” said Sean McAlinden, arch economist at the Center for Automotive Research. “If they get accomplished 2 actor beatific to the United States, they’ll calmly break the Canadians under.”