Global Auto Parts Market — The case for Mexico’s nearshoring opportunity
Global sales for exported automotive parts or accessories from all countries totaled US$400.4 billion in 2021. Overall, the value of auto parts exports increased by an average 2.9% for all exporting countries since 2017 when auto parts shipments were valued at $389.1 billion. For 2021, collectively, the top five major exporters (Germany, China, US, Japan and Mexico) accounted for more than 50% of the global auto parts market in terms of volume.
If we double click on the US as a geographical opportunity, we can see that US imports of auto parts totaled $160.5Bn in 2021, representing a growth of 20.3% compared to 2020 and an increase of 3.5% compared to 2019. At the same time, the USMCA, which entered into force on July 1, 2020, by updating the provisions of the North American Free Trade Agreement (NAFTA) to reflect the standards of the 21st century, also modified the rules of origin, as necessary, to guarantee that the benefits of the agreement go to products genuinely manufactured in the United States and in other parts of North America, and to incentivize production in North America.
So even as countries continue their complete reopening efforts and supply chains try to manage a bigger transactional volume, the transfer of business processes to companies in nearby countries is becoming the norm, where both parties expect to benefit from geographic and cultural proximity. In other words, nearshoring has become sexy again, and as we are already witnessing, Mexico stands to gain a lot from this new world order.
Despite the COVID-19 pandemic and the fact that the United States closed its borders, mainly to China, it continued to work with Mexico through the USMCA, which allowed it to increase sales to comply with the regional content rule.
Along those lines, Mexican exports of auto parts and automotive accessories to the United States reached a growth of 16.7% year-on-year in 2021, to US$ 61Bn, according to data from the Department of Commerce (DOC). Thus, Mexican auto parts exports to the US totaled almost 40% of this country’s total auto parts imports, making Mexico a major player within that industry.
Deep dive into Mexico
During 2021, Mexico shipped US$494.6 billion worth of goods around the globe. That dollar amount reflects a 20.8% increase since 2017 and an 18.6% upturn from 2020 to 2021.
The country’s biggest export products by value in 2021 were cars, computers, trucks, automotive parts or accessories, and crude oil. In aggregate, those major exports accounted for almost a third (32%) of overall exports sales from Mexico. That percentage suggests a fairly concentrated range of exported goods.
Mexico is the world leader for exporting trucks and ranks among the top countries for global sales of computers, cars and automotive parts or accessories. Its export volume for auto parts was US$30Bn, but if we take into account auto parts and ancillary exports related to the automotive industry, then Mexico’s exports amount to roughly US$ 80Bn in 2021.
We can learn a lot about what is going on within the automotive industry and the manufacturing industry as a whole from leading information platforms in Mexico such as Cluster Industrial. Its vast array of news, market reports, events, go-to-market services and overall community of like-minded business people makes it the go-to portal to learn more about what is happening in these industries
Leveraging from our unique synergies with CIAL Dun & Bradstreet, we aim to become the go-to platform for supply side Mexican OEM/auto parts companies interested in growing their business, positioning themselves in other markets such as the US and other major automotive parts consuming countries.
Powerlinx is currently working on a strategic alliance with Cluster Industrial, Mexico’s largest automotive industry information platform and leading expo organizers.