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Auto parts: FDI to Mexico totals US $ 1,378 million in 2020

Mexico‘s auto parts industry attracted 1.378 billion dollars in Foreign Direct Investment (FDI) in 2020.

Within this industry is the manufacture of brake systems, transmission parts, power train, seats, interior trim, seat belts, interior trim and metal stamping, among others.

Typically, customers of auto parts companies award contracts several years before actual production begins.

Every year automakers introduce new models, update existing models, and discontinue certain models and periodically even full brands.

In this process, companies can be selected as suppliers in a new model, they can continue as suppliers in an updated model, or they can lose business in a new or updated model to a competitor.

Between 2016 and 2019, FDI flows to the auto parts industry registered an annual average of 3,219 million dollars.

Auto parts

The figure for 2020 is preliminary and usually tends to rise in subsequent quarters.

Because the amounts reported only consider investments made and formally notified to the National Registry of Foreign Investments of the Ministry of Economy, their nature is preliminary and they are updated in successive quarters.

In 2019, the inflows to Mexico of FDI in the auto parts industry were for 3.127 million dollars.

In car production, the Agreement between Mexico, the United States and Canada (USMCA) increases the Regional Value of Content (VCR) from 62.5 to 75%, with a new methodology.

The following so-called “essential” auto parts must meet 75% VCR on average (value).

  • Engines.
  • Chassis & body
  • Gearbox.
  • Axes
  • Suspension.
  • Direction system
  • Batteries

It also establishes a Labor Content Value (LCV) of 40%. That is, 40% of the value of the vehicle must be produced using wages of at least US $ 16 per hour.

Some notable companies in the industry are:

  • Adient.
  • Faurecia.
  • Magna International.
  • Toyota Boshoku Corporation.
  • TS Tech.
  • ABC Technologies.
  • Delphi Technologies.
  • Bridgestone Americas.
  • Aptiv.
  • Valeo.
  • Nemak.
  • Meritor.

 

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