Plante Moran executives discuss Mexican automotive industry trends at Mexico Now conference

Experienced automotive industry watchers from Plant Moran address manufacturing executives with an interest in Mexico at events in Dearborn, Michigan and Chicago, Illinois.

Mexico Now, Mexico’s most influential maquiladora trade industry publication, hosted a pair of its auto industry conferences last month in Dearborn, Michigan and in Chicago, Illinois. As always, the programs and the presenters appearing before those in attendance provided a plenitude of up-to-date information on one of the most dynamic and quickly growing industries in Mexico’s expanding industrial sector. Among the presenters were Daron Gifford and Ted Morgan, both of whom are auto industry experts with the internationally known accounting firm Plante Moran.

In their Dearborn and Chicago presentation the two Plante Moran experts gave attendees a view of the automotive industry from both the macro and micro perspectives. They began by first identifying what they believe to be the most prevalent megatrends in the automotive industry today. Gifford and Morgan pointed out the industry’s movement towards:

mass and weight reduction;
fewer and combined vehicle architectures;
more sophisticated powertrains;
emerging growth production and sales.

As a result of the aforementioned points, the Plante Moran executives noted that in the coming years the industry will see more OEM and other partnerships, the formation of further joint-ventures and alliances, as well as will experience more in the way of company consolidations.

From the global perspective Gifford and Morgan of Plante Moran provided information on increased unit production in select countries between 2013 and 2019. The top five countries identified, and the projected increases in unit production, are the following:

China with an increase of 8.5 million units;
India with an increase of 2.5 million units;
Mexico with an increase of 1.4 million units;
India with an increase of 650,000 units;
Thailand with an increase of 500,000 units.

After focusing on the overall, global automotive industry picture, the Plante Moran presentation focused on developments within the automotive industry in Mexico. Gifford and Morgan pointed to an August 2014 Forbes magazine article that opined that America’s Car Capital Will Soon Be … Mexico. According to Joann Muller, the article’s author, “Seemingly overnight Mexico’s automotive output has soared, bolstered by a flood of investment from foreign-based car makers, including Nissan, Honda, Volkswagen and Mazda. With $19 billion in new investment, production has doubled in the past five years to an estimated 3.2 million vehicles in 2014.”

Muller ascribes much of the growth in the Mexican automotive industry to the fact that, “Mexico has some of the most liberal free trade arrangements in the world, and it’s making the most of them.”

In addition to the free trade agreements with forty-five countries that have made Mexico a formidable duty and tariff free export platform to many nations, the presentation made by the Plant Moran automotive industry experts at the Mexico Now conferences in Dearborn and Chicago cited to Mexico’s attractiveness as regards industrial site selection by automotive industry firms by additional factors such as labor cost, as well as a decreasing cost of energy in Mexico due to reforms and structural changes in industry rules.