Automotive industry sets new records

Production up 12.5%, exports up 14% during first half

The domestic market shrank slightly for new-vehicle sales in Mexico in the first half of the year, but production and exports were another story.

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Light vehicle production rose 12.5% between January and June compared to the same period last year, and exports increased 14%, the Mexican Automotive Industry Association said today.

The production numbers set a new record: 1.88 million vehicles came off Mexico assembly lines during the period. The numbers for June alone were up 4.9% over June 2016, while June exports jumped 12%.

Exports for the six-month period totaled 1.32 million units.

The growth has come despite a 2.2% decline in sales in Mexico’s principal export market. Sales of Mexican-made vehicles were up 15.9% to 215,235 units in the United States last month, a figure that represents 14.7% of all light vehicles sold.

Ward’s Automotive reported a 2.2% drop in light-vehicle sales in the U.S. during the first half of the year.

If Mexico’s automotive production continues at the same pace, 2017 will be another historical year. The trend indicates production numbers could reach 3.7 million vehicles, up from 3.46 million last year.

Domestic sales declined 5.3% last month. They were up 2.9% in the first six months.

Source: Milenio (sp), El Economista (sp)

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  • csb4546

    Everything is going up – except the disgracefully low wages paid to Mexican auto workers by greedy foreign auto companies. Who negotiates these slave wage deals for Mexico and Mexican auto workers?
    Mexico should demand GLOBALLY competitive wages for its auto workers – or tell foreign auto companies to find their slave labor somewhere else. It’s exploitation, pure and simple.

    • Mike S

      Some truth to what you say but also some inaccuracies. Starting Ford assembly line workers in US make $14 hr but can work up to double that after many years. Their health package is quite expensive in the US. Mexican assembly line workers make $5 hr but their health package is very cheap. Automation has taken over car manufacturing/assembly and there are lots of better paying jobs in robotics, engineering, and software that are related to car manufacturing/assembly. Most vehicle manufacturing jobs are in parts subcontracting which supports hundreds of smaller businesses. No doubt Ford. GM, Chrysler, and European car companies save money manufacturing in Mx. Also there are less permit red tape, lower construction costs, lower taxes, & lower safety and environmental costs. The US needs to move up the employment food chain. We will never be able to compete with poor-country assembly line wages in any industry. We should be the ones who invent, engineer, design, produce the robotics, and write the software. That usually requires a college degree so we should invest heavily in education. Unfortunately we have a president that doesn’t believe in that. He wants to bring all those assembly line jobs back home at $10 an hour…totally unrealistic but his followers believe in the 1980s. Trump may also totally miss the coming 10 million possible US jobs in the green/clean energy revolution if he pulls solar & electric car subsidies.

      • Mike S

        Also Tesla Motors is on a Mexican engineers hiring binge. Highly qualified graduates from Mx universities are being hired and work back and forth in both countries. They make less than their US counterparts, but still make very high wages by Mx standards.

        • csb4546

          That’s the problem – “by Mexican standards”.
          I’m saying Mexican auto workers should make the same salaries as auto workers in US, Germany, Japan, Korea. It’s not even close. And that’s not counting expensive healthcare coverage provided for workers in the US auto industry – which makes the gap much wider.
          Why are Mexican engineers worth less than American engineers?

          • Mike S

            That’s just not the reality and if they did make that much foreign automakers would not set up shop in Mx. Most of the production is exported and meets US/European safety and pollution standards. Mx safety/pollution standards are improving. For a poorer country like MX, those $5 hr jobs are a ticket to the middle class because the cost of living in Mx is so low. And there are lots of much higher paid jobs in engineering, robotics, software, etc that go along with a car plant. The assembly line workers should unionize and ask for some reasonable pay hikes. The difference between a starting US engineer and a Mexican one is probably around 30% . But those are very high paying jobs and there is no reason over time the difference won’t shrink depending on job performance and experience. The Mexican economy is emerging. If they could get their cartel war under control, it would be a tourist and retirement Mecca and that would be a huge shot in the arm for their economy. The US would be smart to help the Mexican economy. Mexico unlike China and Japan, loves and buys lots of US made products. Six million high paid US jobs depend on that trade. Trump doesn’t even understand basic trade economics. He wants a tariff so he can reduce income taxes on the wealthy and make Walmart shoppers pay for it.

          • csb4546

            “That’s just not the reality and if they did make that much foreign automakers would not set up shop in Mx ” – my point exactly. The only reason these greedy foreign companies are here is because of the “deal” Mexico offers – slave wages, no taxes, no environmental standards, no safety standards. The media treats this like a huge “success story”. But it’s exploitation, period.

          • Mike S

            Waving a magic wand and demanding $20 an hour for assembly line workers is unrealistic and never going to happen. What Mexico needs is continuous upward pressure on wages until they become as reasonable as possible but can still attract foreign investment. The car industry are choir boys compared to what’s going on at the border maquiladoras where workers are making $2.50 an hour. As the work force gets more skilled, Mexico needs some better paying home grown industries. Carlos Slim is sitting up in Manhattan on $60 billion…why are not people like him investing more in Mx ? It will be a long struggle but I have confidence in the Mexican worker and university system. The US drug addictions and resulting cartel wars are the biggest hindrance to economic progress right now..

          • csb4546

            “Those 5 dollar an hour jobs are the ticket to the middle class.”
            No, those $5 jobs should be $20 jobs so Mexico can grow a REAL middle class.
            $5 an hour does not get you into the Mexican middle class – is $15,000 pesos a month middle class? No. I know Mexicans are happy to have these jobs – but that’s a reflection of the poor labor market in Mexico – there are no options, hence no wage competition, and low-ball salaries. Whoever negotiated these multi-year labor deals screwed Mexican workers.

      • csb4546

        Foreign manufacturers have been taking advantage of non-existent auto safety standards in Mexico.
        Mexican-made cars only have to meet Mexican safety standards – for both materials and crash tests.
        So they make extra profit by producing cars with inferior materials and worse safety performance in Mexico. There are no safety tests and crash ratings specifically for Mexican-made cars. (They don’t want consumers to know the results.) Hence the Mexican government’s delay until 2020 or beyond for implementation of new standards. Safety costs money – and cuts profits.

      • csb4546

        3 different categories of Ford interns start at $22 an hour plus expensive benefit packages.
        Mexicans get $5 an hour and practically no benefits. I rest my case.

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