More than 60 Canadian automotive suppliers operate in Mexico, according to information from Global Affairs Canada.
Mexico is the world’s sixth largest producer of light vehicles and the fourth largest exporter. Its production accounts for about 20% of North American automotive production.
In addition, the Mexico-U.S.-Canada Agreement (USMCA) includes stricter rules of origin for this sector, which is already the most integrated among the three North American countries, representing additional opportunities for Canadian auto parts exporters to Mexico.
Original equipment manufacturers (OEMs) and Tier 1 manufacturers will replace imports from non-North American regions.
More than 60 Canadian suppliers have manufacturing facilities in Mexico, giving Canada a significant advantage to further expand its share of this market.
Information from the U.S. Department of Commerce indicates that automakers in Mexico are mainly concentrated in the northern region of Baja California, Sonora, Chihuahua, Coahuila, Nuevo Leon and San Luis Potosi.
OEM plants are located in Guanajuato, Aguascalientes, Jalisco, Estado de México, Hidalgo, Morelos, Puebla and Veracruz.
In terms of supply chains, auto parts producers are located near these plants, mainly in Coahuila, Chihuahua, Nuevo León, Guanajuato, Querétaro, Puebla, Tamaulipas and Estado de México, although they are also located in other parts of the country.
Heavy vehicle manufacturing plants are located mainly in northern Baja California, Coahuila, Nuevo León, Sinaloa, San Luis Potosí, Guanajuato, Querétaro, Hidalgo, Veracruz and Estado de México.
The USMCA, which entered into force on July 1, 2020, included a number of changes to the rules of origin for the automotive sector.
The T-MEC requires that 75% of a vehicle’s content (70% in the case of heavy trucks) be produced in North America, and that major automotive parts be sourced from the United States, Canada or Mexico.
After a phase-in period ending in 2023 for cars and 2027 for trucks, only goods meeting these content requirements will have duty-free access.