USMCA will give Mexico more investment in auto parts

Up to 20% of the investments that will be relocated from other regions will be captured to supply the North American market, presumes.

With the launch of the Agreement between Mexico, the United States and Canada (USMCA), Mexico could capture at least 20% of new investments from Japan, Germany, South Korea and China that will go to North America, to replace imports of the region, said Oscar Albin, president of the National Auto Parts Industry (INA).

USMCA will give Mexico more investment in auto parts

China, Japan, South Korea, and Germany are the main exporters of auto parts, after Mexico, to the North American region, for an amount of 85,000 million usd. But a part of the product that is sent from outside the region today must be produced within it, given the need for the increase of regional content agreed in the USMCA.

Companies installed in Asia and Europe and selling to North America will have to guide their operations to Mexico, the United States or Canada to sell in the Nafta area and avoid customs duties.

At a press conference, the manager said that this translates into opportunity areas for Mexico; However, much will have to influence the issue of what conditions Mexico offers to these investors.

“In case the USMCA is ratified we will have an opportunity to attract investments from these countries, although the United States is a great competitor, the south of that country is, or maybe some Japanese or Koreans prefer to go to US” Albin said.

“I think we will have an opportunity to capture 20% of the investments during those periods (when the transition of the adjustment of rules of origin takes place). It is a growth opportunity for the production of auto parts in Mexico,” he said.

The leader of the companies producing auto parts in Mexico said that there are multiple Chinese companies that have problems accessing the United States market and that this could be advantageous for Mexico. For example, he cited: if the 10% customs duties would rise to 20 or 25%, Chinese (companies) that do not have plants in North America would definitely lose competitiveness and a migration to Mexico is a great opportunity.

He highlights that 80% of the production of automotive parts and components from Mexico is sent to the United States, an additional 10% is for the manufacturing assembly in the domestic market and then exported, and another 10% remaining are for internal consumption of spare parts .

By the end of this year, auto parts turnover in Mexico is expected to reach 100,000 million dollars, as a record figure.

Source: El Economista.

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