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Customer LoginsMexican light-vehicle sales increase 11.4% y/y as production and exports slip in March
Mexican light-vehicle sales surged 11.4% year on year (y/y) in March, continuing the trend from February, but a 14.2% slip in exports caused production to fall 11.0% y/y.
IHS Automotive Perspective
- Significance: Mexico's light-vehicle market continues to post strong gains thanks to favourable macro-economic conditions. For the first quarter, sales are up 13.4%, production down 5.1%, and exports down 4.6%.
- Implications: Positive local demand has failed to offset a slip in exports, which dominate the production landscape in Mexico as the struggling markets of South America weigh on the industry.
- Outlook: IHS Automotive has adjusted its forecast for 2016 on the strong first quarter and is now projecting sales this year will reach 1.44 million units, up 7.1%. Continuing investment in production facilities will help Mexican output grow steadily and strongly, despite the headwinds faced from the shrinking South American export markets.
Mexico's light-vehicle sales continued to surge at double-digit percentage rates in March, leading to a strong first quarter. March sales grew 11.4% to 116,863 units, according to latest data from the Mexican Automotive Industry Association (Asociación Mexicana de La Industria Automotriz: AMIA). For the first quarter, sales have increased 13.4% y/y to 347,326 units. The market grew 19.1% in 2015, reaching sales of 1.35 million units, split by passenger cars, up 19.7% to 892,194 units and light commercial vehicles (LCVs) rose 17.8% to 459,454 units. Sales growth in 2015 in Mexico was different from the trends in other global regions, in that passenger-car demand increased at a higher pace than LCV demand. IHS forecasts sales growth of 7.1% in 2016; we forecast the sales split between LCV and passenger cars in 2016 will favor passenger cars, at 65% versus 35% LCVs.
Nissan (including Infiniti) maintained its position as the best-selling group in Mexico, with sales of 30,961 Nissan and 166 Infiniti units, an 8.3% y/y gain for Nissan and an 18.6% gain for Infiniti. GM regained its position as second-largest seller for the month of March, with 21,180 units sold and a gain of 4.9%; for the quarter, GM also remains ahead of VW. Volkswagen (VW; including Audi, SEAT and Porsche) sold 19,340 units in March 2016, an increase of 11.9%. Fourth place belonged to Fiat Chrysler Automobiles (FCA) with 7,683 units, a 3.3% y/y gain. Ford and Lincoln claimed fifth with 6,103 units (down 8.2%) and 177 units (+10.6%) respectively. Toyota jumped above Honda and Acura with a 21.6% y/y surge in sales to 7,756 units compared to 6,048 units for Honda (+14.4%) and 125 units for Acura (-37.8%).
Mexico's output slipped 4.1% y/y in March to 266,960 units, from 299,809 in March 2015, as GM, FCA, VW, Nissan and Mazda all reported declines in output. Over the first quarter, production slipped 5.1% to 805,736 units. Nissan remains Mexico's most significant contributor and output rose 3.5% y/y over the quarter to 212,079 units, while second-placed GM's output fell 11.4% to 145,446 units in the first quarter 2016. Ford's output gained 6.6% y/y over the first three months of 2016, to 119,744 and FCA slumped 24.6% y/y to 96,805 units. Mazda was down 18.9% for the quarter, to 39,216 units, while VW's first-quarter production dropped 25.1% to 92,220. Toyota and Honda led the percentage gains as Toyota reported output rose to 36,299 units, an impressive 86.5% rise over the quarter. Honda reported a 32.4% y/y quarterly gain to 63,927 units.
Mexican light-vehicle exports also slipped 4.6% y/y in the first quarter, with a March export decline of 14.2%. The declines in exports were from the same makers with declines in production, including GM, FCA, VW and Mazda plants. GM exports were down 12.5% y/y to 3113,123 in the quarter, while VW shipped only 69,450 cars, down 29.8% y/y. Brazil's economic woes continue to drag on total export numbers, despite strong demand coming from the US and Canada; over the first three months of 2016, Mexico exported 10,404 fewer units to Brazil than the same period of 2015.
Outlook and implications
The Mexican light-vehicle market has returned to pre-crisis levels, which stood at over 1 million units per annum (upa) between 2004 and 2008, largely by increased access to credit and improved consumer confidence, and the market is largely considered business as usual. With double-digit increases in many months, sales increased 19.1% in 2015 and have kicked off 2016 with a strong 13.5% y/y sales increase for the first quarter, driven by solid gains in each of the three months. IHS forecasts that conditions will continue to improve and a moderate pace of sales growth to ultimately become the trend, beginning with a forecast for 2016 of an increase of 7.1% and growth in subsequent years of 1−2%.
The AMIA notes that the Banco de Mexico, the central bank, in March 2016 indicated an expectation of economic growth of 2.40% in 2016 and 2.92% in 2017, down from earlier projections of 2.69% in 2016 and 3.18% in 2017. Inflation is now expected at 3.30% in 2016 and 3.41% in 2017, up from earlier projections of 3.1% in 2016 and 3.31% in 2017. According to the AMIA, the economy faces weakness of the external market and the global economy, and international financial instability. As Mexico's fortunes tend to mirror those of its neighbour, the US, the current stuttering economic indicators north of the border will need to be watched closely.
The AMIA reported that used-car imports are continuing to decline, which is a factor in our sales forecast. The slowdown of imported used cars since 2014 has helped provide some breathing room for new cars. In 2015, imports of used cars fell by 60.6%, the AMIA reported, noting that this was the lowest volume since 2005. There was an uptick in importations in February 2016, however, of 25.8%. The association continues to note that 7.75 million used vehicles in the country will have implications on the environment, road safety, and the renewal of vehicles. The AMIA remains concerned that the influx of used vehicles from the US affects the renewal of the vehicle parc, and encourages the Mexican government to keep the current practices in place.
Investments by automakers and component suppliers continue, with Ford making an announcement in early April 2016 about a new USD1.6-billion small car plant. There is a slight hiccup with the Kia plant, as the government of the state of Nuevo Leon looks to renegotiate that aid package that had been awarded to Kia ahead of construction. This does have potential to delay Kia's production start. After increasing 9.9% to 3.21 million units in 2014, we forecast that Mexican light-vehicle production growth will have been more moderate in 2015, reaching 3.39 million units, up 5.7%. However, as new plants come online in 2016 and 2017, Mexico's output is forecast to reach 4.59 million units in 2018, passing 5.0 million units in 2024. Mexico's production eclipsed Brazil's in 2014 and is forecast to remain ahead throughout the forecast period, in part due to slowing markets in Brazil and Argentina.
About this article
The above article is from IHS Automotive Same-Day Analysis of automotive news, events and trends, and is a deliverable of the World Markets Automotive Service. The service averages thirty stories per day and also provides competitor and country intelligence. Get a free trial.