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.
Automotive suppliers
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 the supply chains, auto parts producers are located near the assembly plants.
They are mainly located in Coahuila, Chihuahua, Nuevo León, Guanajuato, Querétaro, Puebla, Tamaulipas and Estado de México.
However, they are also present in other regions of the country.
Heavy vehicle manufacturing plants are concentrated in northern Baja California, Coahuila, Nuevo León and Sinaloa.
They are also located in San Luis Potosí, Guanajuato, Querétaro, Hidalgo, Veracruz and Estado de México.
The T-MEC, effective July 1, 2020, introduced key changes to the automotive sector’s rules of origin.
Now, 75% of a vehicle’s content-and 70% in the case of heavy trucks-must be manufactured in North America.
In addition, the main auto parts must come from the United States, Canada or Mexico.
After a transition period, which ends in 2023 for cars and 2027 for trucks, only products that meet these requirements will be eligible for tarifffree trade.