Leo Guzman-Anaya1
University of Guadalajara, Mexico
Member of PECC Mexico
Background
Mexico’s automotive industry experienced a wave of rapid growth after the 2008 financial crisis. It now ranks as the fourth major exporter and the seventh global producer of automobiles and fifth producer of auto parts. This position was achieved primarily because the industry has been characterized by global production networks with fragmentation of their production processes, where companies have searched for locations that favor cost optimization and manufacturing quality. In this sense, Mexico provided a developed and functional productive infrastructure, human capital endowment, and a growing internal market which stimulated the arrival of automotive Original Equipment Manufacturers (OEM) from north America, Europe, and Asia. Also, the favorable geographical location that provide entry to the north American market and a network of 13 Free Trade Agreements (FTA) with preferential access to 50 economies position Mexico as a preferred location for investment projects as reflected in an inflow of Foreign Direct Investment (FDI) in the automotive industry2. Between 2008 and 2019, FDI flows to the industry experienced an annual average growth rate of 11.6% in real terms3.
Source: PECC News feed
