MEXICO’s AUTOMOTIVE INDUSTRY by Pat Shaw

TABLE OF CONTENTS Subject Page PROLOGUE 4

- Mexico : a country of contrasts - Mexico’s automotive significance - About this report

ECONOMIC INDICATORS 8 - General economic indicators - Automotive industry trends - Reasons to be cautious - Local business sentiment

VEHICLE MANUFACTURING IN MEXICO 14

- Cars and Light Trucks – the key players - Commercial Vehicles – the key players - The vehicle parc in Mexico - Newcomers - Recent investments

THE COMPONENT SECTOR IN MEXICO 26

- Overview - Key global players - Key domestic players - Business opportunities - Employment and wage levels in the

component sector - A note on the Mexican aftermarket - Diversification into aerospace - Recent investments

INTERNATIONAL RELATIONS 41

- USA - NAFTA - Latin America - European Union - Asia

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INVESTMENT IN MEXICO 45 - The importance of FDI to Mexico - Current patterns of investment - Automotive investment clusters - The Maquiladora programme

LOGISTCS & INFRASTRUCTURE 49

- Overview - Typical transit times - Typical transportation costs - Customs clearance procedures - Special Economic Zones - Infrastructure Plans

CONCLUSIONS & BUSINESS OPPORTUNITIES 51

- Key conclusions and recommendations - Generic business opportunities - Specific business opportunities

ACKNOWLEDGMENTS 58 USEFUL CONTACTS 60

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PROLOGUE

MEXICO : A COUNTRY OF CONTRASTS Mexico presents a series of contrasting, and sometimes confusing, images to the outside world. Geographically, at 1.92 million square kilometres, Mexico is the 14th largest country in the world, equivalent in size to Western Europe and stretching from the dry deserts in the North to the tropical rain-forests in the South. It has the bulk and power to be a dominant force amongst the countries of Central and South America. But Mexico itself remains dominated – economically, politically and increasingly culturally – by its giant northern neighbour, the United States of America. Financially, it is home to the world’s second richest man – telecommunications tycoon Carlos Slim Helu – whilst 40% of the population live on or below the poverty line. Whilst the economic statistics show an overall increase in personal wealth, there is a persistent feeling amongst middle-class Mexicans that their disposable income is declining. In global commerce, Mexico boasts more free trade agreements than any other country. But more than 80% of its trade – both export and import – is still conducted with the USA. Economically, some projections anticipate that Mexico could be the world’s fifth largest economy (in terms of GDP) by 2040. But the current reality is that Mexico is both failing to achieve the standards of a “developed” nation and is being overtaken by the rising giants of Asia. Culturally and linguistically, Mexico is closely tied to its southern neighbours in Central and South America. But these historical links are not matched by current trade volumes, and once again the dominating influence in modern Mexico is from the north. It is a relationship with which many Mexicans feel uncomfortable.

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MEXICO’S AUTOMOTIVE SIGNIFICANCE There can, however, be no doubt that Mexico has attained a significant position in the global automotive industry, and that the automotive sector will continue to be a major engine of growth for the Mexican economy in the foreseeable future. In 2007, Mexico produced just over 2.1 million cars and light commercial vehicles, plus over 86,000 heavy trucks and buses, to confirm its place amongst the top ten global producers. Over 75% of the production total was exported – the vast majority to the USA and Canada. All production comes from plants owned and operated by international vehicle makers – Ford, GM, Chrysler, VW, BMW, Toyota, Nissan and Honda for cars and LCV’s, with Mercedes Benz, Navistar, Volvo, Freightliner, Kenworth, Scania, MAN all represented in the commercial vehicle sector. Vehicle production continues to expand in Mexico, whilst it is declining elsewhere in North America. Between 2000 – 2007, Mexico’s output grew by 18%, whilst the USA and Canada recorded falls of 16% and 14% respectively. The figures for the component sector are also impressive. Automotive components produced in 2007 were worth around $30 billion, with a substantial proportion again exported to the USA. Unlike the vehicle manufacturing sector, the component industry in Mexico is not wholly controlled by international players. Alongside the American, European and Japanese tier 1’s, there are a number of indigenous Mexican companies who have established themselves as first-rank suppliers to the automakers. Overall, automotive production’s current contribution to the Mexican economy is calculated to be approximately 18% of total manufacturing GDP and 22% of total exports. The opportunity presented by NAFTA has, in twelve years, boosted production levels by almost 250%, and given Mexico an internationally significant auto industry. It has not, however, been an ever-upward curve. Between 2001 and 2005, there was a period of relative stagnation, with fewer investments, unfavourable exchange rates and costs outstripping inflation. Thereafter, the industry has enjoyed a resurgence, with new investments and models, and rising production figures.

A key challenge now facing the Mexican industry is to maintain the current levels of growth in the face of a downturn in sales in their most important market, sluggish local demand, and new competitors emerging from Asia.

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ABOUT THIS REPORT Recognising the fact that Mexico is simultaneously a significant player in the global motor industry and at the same time a country of contradictions, SMMT has undertaken this study to offer UK-based companies a clearer view of the automotive sector in Mexico, the conditions under which it operates, the opportunities which it may offer, and the sources of help/information that may be available. The report is based upon a series of interviews conducted in Mexico in March/April 2008, and supported by supplementary desk research. The figures quoted are accurate at that time. By its very nature, the report can present only general advice and information. However, during its compilation, SMMT developed contacts with a range of key players in Mexico, both inside and outside the automotive industry, who may be able to assist with specific questions and enquiries. Whilst every care has been taken to ensure the accuracy of the report, SMMT cannot accept any responsibility or legal liability for the accuracy, completeness or value of the information that it contains.

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ECONOMIC INDICATORS

GENERAL ECONOMIC INDICATORS Mexico currently presents a number of positive economic indicators : Inflation Inflation is now running at just below 4%, and has been relatively stable for some time. This is a substantial improvement since the mid-1990’s, when it peaked at 52%, and considerably better than the average figure for Latin America (predicted at 7.1% for 2008) GDP In 2007, GDP grew at 3.2%, down from 4.7% the previous year. It is expected to fall further – to around 2.8% - in 2008. This is a positive figure when compared with the 1.5% - 1.6% forecast for the USA and Europe. However, it is eclipsed by China’s continuing growth at between 8 – 9%. Mexico has the highest per capita GDP in Central and South America. Exchange Rates The Mexican Peso generally fluctuates in line with the US Dollar. In the last four years, it has remained stable within a band of 10.8 to 11.2 Pesos equals $1. As a result of the Dollar’s current weakness, Mexico has gained a significant cost advantage over manufacturing bases in Canada (whose currency has appreciated by 40% against its US equivalent), or, further afield, Brazil and China. Furthermore, the current strength of the Euro against the Dollar makes Mexico-produced components potentially attractive for European buyers.

Comparative Exchange Rates against US Dollar Jan 2005 Jan 2006 Jan 2007 Jan 2008 Chinese Yuan 8.27 8.07 7.77 7.24 Indian Rupee 44.29 44.29 44.15 39.20 Mexican Peso 11.25 10.57 10.83 10.94

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Debt Levels Levels of external debt have been declining steadily, and national reserves are reportedly at an all time high. The country has achieved investment grade status with Moody’s and other international credit agencies. Foreign Trade

Mexico’s combined import and export figures totalled $610 billion in 2007, representing a ten-fold increase over the levels in 1990.

These economic indicators are backed up by a new sense of political stability. After decades of “dictatorial democracy”, Mexico has now demonstrated an ability to hold elections and change governments without unduly disrupting either commercial business or public order.

Annual Inflation Rates

27.5

15

18.6

12.32

8.96

5.15.7

3.985.19

3.334.05 3.71

0

5

10

15

20

25

30

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

3.7

7.1

-0.3

1.9

1.7

4.4

3

4.8

3.2

2.8

-1 0 1 2 3 4 5 6 7 8

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008 (est)

GDP Growth (Annual Rate %)

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AUTOMOTIVE INDUSTRY TRENDS The automotive industry is a key cog in Mexico’s manufacturing-based economy. It accounts for around 18% of manufacturing GDP and 22% of manufacturing exports, as well as providing employment for 18% of sector’s workforce. The sector is Mexico’s No 1 foreign exchange earner, ahead of the oil and petroleum industry. In contrast with the downturn currently being experienced in Canada and the USA, trends in the Mexican industry remain largely positive :

• Vehicle production continues to rise. Having passed the 2 million mark last year, it is expected to continue growing to around 2.7 million by 2014. (These projections, from leading industry analysts, contrast markedly with the 4 million units predicted by the Mexican government, and may suggest that local economic estimates tends to be on the optimistic side !)

• Investment in increased production capacity is buoyant,

with at least 20 projects, worth $4.4 billion, in the pipeline. Equivalent investments in the USA total only $2.9 billion.

• Component production continues to expand at a healthy 6%

per annum. It is clear, from these headlines, that Mexico’s automotive expansion is still principally driven by its attraction as a manufacturing base to serve the wider North American market, and by the willingness of foreign enterprises to invest additional funds in Mexico-based facilities. There appears to be little evidence of parallel growth in demand within the domestic market, nor of Mexico actively acquiring the wider automotive skill set that encompasses design, development and advanced engineering.

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REASONS TO BE CAUTIOUS Although the economic indicators are generally positive, and the automotive industry is continuing to expand, there are two principal areas of concern in assessing Mexico’s long-term growth prospects. The first is the uneven socio-economic climate within Mexico itself. Around 40% of the population live in poverty. Only two in every five Mexicans is officially employed, and 50% of the labour force earns less than $10 a day. Therefore, the opportunities for rapid growth of the domestic automotive market are limited. The second area of concern is the potential for a significant downturn in the economy of the USA – Mexico’s dominant customer – and the political protectionism which might result. North of the border, vehicle sales are already declining (in 2007, the total fell below 16 million for the first time in a decade). Whilst VM’s and their tier 1 suppliers can seek to cut costs by relocating more production to Mexico – and that is certainly the local expectation – if they are unable to sell the end-product to the American consumer in sufficient quantities, there will, inevitably, be a reduction in demand for Mexican-made products.

How does Mexico Compare ? There are some interesting comparisons to be drawn between Mexico and Brazil – often regarded as a “Latin” rival - and China, which is setting the base for growth in the automotive sector. Projected production figures for 2008 suggest that, whilst Mexico will sustain modest growth to around 2.3 million units, Brazil will achieve around 2.8 million. However, Brazil has not yet shaken off its reputation for market volatility in the eyes of some commentators and investors. Meanwhile, both Mexico and Brazil are dwarfed by China, where production is expected to reach 9 million units. However, Mexico has a clear lead in terms of vehicle exports. Over 75% of Mexican production is exported, whereas only 33% of Brazilian-made vehicles are shipped overseas, and China’s surging domestic market consumes all but 6% of local production. In the component sector, Mexico is host to a stable and extensive supplier base, built up over 10 – 15 years, and familiar with producing to global standards.

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At the same time, in a presidential election year, fears about losing American jobs, and cheap imports, come to the fore. Already, the two leading Democratic candidates have found it politically useful to indulge in some “NAFTA-bashing”, and a tight election race may well heighten this trend, and the uncertainty that it engenders. A further side-effect of an American slump may be a sharp drop in the money pumped into the Mexican economy by emigrant workers in the USA sending back regular payments to their families at home – thus reducing the disposable income in the domestic market. Mexico should also not under-estimate the challenge posed by the burgeoning automotive industry in the southern parts of the USA. Whilst employment costs there are higher, logistics costs are much lower. Significant tax breaks and investment incentives are also available.

German investors, in particular, now seem to favour the region. BMW and Mercedes Benz are well established in South Carolina and Alabama respectively. And, significantly, VW now seem to be committed to establishing a manufacturing base there, having previously looked long and hard at the alternative of expanding their Mexican operation to meet all their North American requirements.

In Brazil, the component makers have suffered from the volatile economic climate, and therefore they cannot match the overall range and consistency of their Mexican counterparts. They also lack the regular inflow of finance and expertise from the USA. In China, the supplier base has been outstripped by the pace of vehicle manufacturing, leading to an unstable supply chain and great variations in quality standards. When set in direct competition to one another, Mexico has the distinct advantage that it is already an integral part of the North American automotive production system. In the short term, at least, this should enable it to fend off competition from its larger rivals in that market. It is significant that Ford has chosen to build the Fiesta small saloon in Mexico rather than Brazil, where most of the development work was undertaken. On the other side of the coin, there is little evidence of Mexican companies making inroads into the booming automotive markets in Asia.

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LOCAL BUSINESS SENTIMENT Despite the caution of economic commentators, based on the factors mentioned above, the companies and associations interviewed for this report were universally optimistic about future business trends. The general feeling was that the present economic difficulties in the USA would be to Mexico’s advantage, with more production being out-sourced to cut costs. In the short-term at least, that trend would outweigh any decrease in American consumer demand. Several component companies reported a downturn in orders from the USA, but none regarded it as a critical, or long-term, problem. The overall sentiment is that problems in America will be short lived. Certainly, there was little indication of any vigorous actions by the component makers to broaden their international client base. The most pessimistic noises came from the commercial vehicle sector, where there were reports of reduced orders and delayed investments. There were also fears that the absence of emissions and safety regulations for trucks operating within Mexico will leave the local market exposed to cheap and basic imports from emerging Asian manufacturers.

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VEHICLE MANUFACTURING IN MEXICO

CARS & LIGHT TRUCKS Compact cars and pick-up trucks make of the bulk of vehicles currently manufactured in Mexico. Whilst these are also the vehicles that dominate the domestic vehicle park – small, economical saloons being the preferred choice of city dwellers, and pick-ups with high ground clearance and 4x4 drive being popular with owners who regularly have to negotiate Mexico’s poorly-maintained or unpaved rural roads – the majority of Mexico’s production is destined for export.

AMIA – Asociacion Mexicana de la Industria Automotriz – is the trade association representing the manufacturers of vehicles below 8 tonnes, and also motorcycles. Its members are all foreign-owned VM’s – BMW, Chrysler, Fiat, Ford, General Motors, Honda, Nissan, Peugeot, Renault, Subaru, Suzuki and Volkswagen. Toyota recently withdrew from membership. For the trade association, the key current concerns are the likelihood of an increased influx of used vehicles from the USA into the Mexican market and the rising cost of raw materials. Worries were also expressed that politically motivated protectionism, rather than the downturn in the American economy, may hinder the growth of Mexico’s auto industry. They acknowledge that Mexico-based R&D programmes – and the expertise to support them – are scarce ; similarly, the association detected little local interest in hybrid vehicles or other alternative vehicle technologies. The Key Players Ford Ford was the first automaker to establish a manufacturing presence in Mexico, as early as 1925. Today there are Ford assembly plants in Hermosillo (Sonora State) and Cuautitlan (Distrito Federal), plus an engine plant in Chihuahua. In total, they have around 6,000 local employees. Historically, Hermosillo has been the home of passenger car production, and currently makes the Fusion, Mercury Milan and Lincoln NKZ models. The Distrito Federal base is the home of pick-up and light trucks (F-series, H215 and LFC models). In 2007, Ford produced 256,000 cars and 48,200 LCV’s, representing a fall of 13.8% from the previous year. 86% of total production was exported.

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This year has seen a significant shift in Ford’s traditional manufacturing pattern in Mexico, with production of the new Fiesta being allocated to their pick-up and LCV plant. The introduction of economical cars in place of thirsty trucks is a strategy that Ford is also pursuing in selected American plants. In comparison with other global production centres, Ford regards Mexico as 10 – 15% cheaper than the USA, but, in terms of direct costs, 15 – 20% more expensive than China. Brazil is perceived as a strong regional competitor on both quality and cost, with Mexico’s principal advantage being proximity to the American market. Ford estimate that they source around 70% of their components locally. All their tier 1 suppliers are already in Mexico, but they see some deficiencies at the tier 2 and 3 levels, particularly in powertrain parts, plastics, and injection/moulding skills. They also mentioned a need for engineering services, although most design and development work is undertaken in the USA or Brazil, and they only have around 250 engineers working locally in Mexico. Some research work is undertaken in partnership with local universities. They have, in the past, held unfruitful discussions with various UK-based design engineering companies. It is interesting to note the engineering work on the new Fiesta model, which will be built in Mexico, was largely conducted in Brazil – another indication that global VM’s largely regard Mexico as a manufacturing base. General Motors GM entered Mexico ten years later than Ford, but outstripped the production of their American rival to become the market leader in Mexico – a position which they surrendered to Nissan in 2007. Their production total for 2007 fell 7% to 467,667 units, of which the majority (292,316) were pick-ups and SUV’s. 82% of output is exported. Traditionally, they have made a wide range of models in the pick-up and light truck sector, including the Avalanche, Escalade, Sierra, Kodiak, Silverado and Suburban brands. However, they are now taking steps to rationalise the range – for example, production of the Kodiak has been terminated. In the passenger car sector, they produce small saloons under the Chevy brand, principally for the local market, and the HHR model for export.

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The established assembly plants at Toluca, Silao and Ramos Arizpe are being supplemented by a $650 million investment in a Greenfield site near San Luis Potosi, which comes on stream in 2008. This is expected to lead to the closure of the Toluca facility. This year has also heralded full production of the Saturn Vue, a smaller and more fuel-efficient SUV than GM’s traditional offerings. The new vehicle has proved very popular with American consumers worried by rising fuel costs, and is the prime reason behind the 38% increase in export sales (to 127,625) in the first four months of 2008. Chrysler Chrysler has facilities at Toluca and Saltillo, principally making the PT Cruiser and a range of Ram-branded light trucks. The recent “divorce” from Daimler has re-awakened the company’s interest in Mexico – one of the few bright spots in its limited international portfolio. A $48 million expansion programme has recently been instigated at Saltillo. Chrylser exports a higher percentage of their production than either of their American rivals. In 2007, 96% of the 114,500 cars and 169,400 light trucks produced were sold overseas. Chrysler will use Mexico as a test bed for the new A1 small car which they are acquiring from China’s Chery Automobile, prior to its launch in the USA as a Dodge-brand product. They are also reported to be working with a Korean partner on another economy vehicle, which may be produced in Mexico. Chrysler has extensive sourcing programmes in Mexico. Their projected local component spend in 2008 is estimated at $6 - $7 billion. Fifteen years ago the figure was less than $2 billion. A new supplier park, adjacent to the Toluca plant, opened in December 2007. Nissan Nissan was the big winner in 2007 amongst Mexico’s global vehicle assemblers. The sprawling Aguascalientes plant, and its sister facility at Civac, turned out almost half a million vehicles, representing a 22% growth over the previous year’s total, and enabling Nissan to topple GM from the top of the production rankings. The current product range includes the Tsuru, Platina, Versa, Tiida and Sentra saloons, plus the Largo and Doble Cabina families of pick-up truck. All models are sold, to varying degrees, in both the domestic and overseas markets. In total, 65% of production is exported.

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Approximately 12,000 units per annum are shipped to Europe – a figure that Nissan expects to increase in the future. The Clio, from their global partner Renault, is the only Europe-designed model that Nissan currently build in Mexico. Future production plans were unclear. The expectation is that Mexican production will continue to focus on small and medium sized cars, although there are no imminent plans to introduce new models. Hybrid and alternative fuel vehicles were not predicted to feature in the Mexican market. In addition to their assembly plants, Nissan maintain a technical development centre and an emissions analysis laboratory in Mexico. However, all substantive design and development programmes are managed and conducted in either Japan or the USA. Most components are sourced from global tier 1’s, based in either Mexico or the USA. Although there are some areas in which Nissan would like to identify new suppliers (see Conclusions and Business Opportunities), they are unenthusiastic about purchasing products directly from Europe. Suppliers in Japan are regarded as a better, and cheaper, option. Toyota In contrast to Nissan, Toyota’s approach is to concentrate on one product type – the Tacoma family of pick-up trucks – and a single market – the American one. Virtually the whole 2007 production run (32,250 units) was exported across the border from the plant in Baja California. It seems that this tightly focused approach will continue. Whilst there are already indications that Toyota will build its new, low- cost car in India and Brazil, no such plans have been detected for Mexico. Toyota reports having 54 registered component suppliers in Mexico, with whom it spent $1.9 billion in 2007. Both the total number of suppliers and the total spend have more than doubled within the last five years (the Baja California assembly plant opened in 2004).

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Honda Honda entered Mexico in 1988, originally to make motorcycles. Since 1995, a 30,000 capacity plant at El Salto, in Jalisco Province, has produced the Accord saloon. Last year, the CR-V was introduced and now accounts for around 50% of total output. Around 60% of production is exported, but the contribution of the Mexican plant to Honda’s total output in North America, which is the company’s No 1 global market, is comparatively modest. Volkswagen VW’s plant at Puebla was its first –and so far only – production facility in North America. Established in the 1960’s, the plant is perhaps best known for production of the original VW Beetle, which continued until 2003 – some 25 years after the model was discontinued in Europe. Today, the plant makes a range of vehicles familiar to European consumers, including variants of the Jetta (including the new fuel-efficient Jetta Sportwagen), Bora and Golf. It is also the global production base for the new Beetle, recently passing the one million milestone. Over the last three years, VW have pumped considerable additional investment into the plant, but it now seems that they have also concluded that they must open an additional facility, probably to be located in US southern states, to support their North American ambitions. This decision means that Mexico is unlikely to have the opportunity to assemble the higher value models within the VW range. However, local production levels are buoyant, rising 18% to just under 410,000 units in 2007 – the second highest figure that VW has achieved in Mexico. A substantial proportion – 81% - is exported, but VW’s Mexican operation serves a much wider range of overseas markets than the other automakers. A little over half of their export shipments are destined for the USA (cf. 95% for other manufacturers), with Europe accounting for 30%, and the balance split equally between Latin America and the Asia Pacific region. In the first four months of 2008, VW’s export figures rose 29% to 123,000, with a favourable exchange rate fuelling demand in Europe, Brazil and Argentina. Thus, in terms both of the range of models produced and the diversity of markets served, Volkswagen’s Mexican operation seems better placed than most of their local competitors to weather the economic downturn and escalating fuel costs in the USA.

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However, VW appears to regard Brazil, where it maintains a number of technical facilities, as a better option than Mexico for vehicle design, development and adaptation to local tastes. For component purchases, VW de Mexico reports that 237 of its principal suppliers are locally based, 60 are established elsewhere in NAFTA, 63 are European and 30 come from Brazil. Locally based companies account for 59% of total procurement spend, but, of the top 20 suppliers, only one is Mexican owned. There is a notable cluster of German component makers in the Puebla region. BMW BMW opened a small plant near Toluca in 1996. Currently, it is used not for mainstream vehicle assembly, but for adapting imported vehicles with armour plating and other security features. The modified vehicles are re-exported around the world.

Mexican Waves in London Locally designed and developed cars, and indigenous brand names, are almost unknown in Mexico. But one did surface recently – at the British International Motor Show in London. The Mastretta MXT is a lightweight sportscar with an aluminium and composite body, powered by a 2.0 litre turbocharged engine built by Cosworth in the USA and imported duty-free into Mexico under NAFTA regulations. It has been designed and developed by the Mastretta brothers – Carlos and Daniel – who normally work on commercial vehicle adaptations. Curiously, the MXT will initially only be offered in an RHD configuration (hence the London launch), and production in the first year is likely to be less than 100 units.

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COMMERCIAL VEHICLES

here appears to be more business pessimism within the heavy

ost domestic sales are made to large fleet operators. The smaller

NPACT – Asociacion Nacional de Productores de Autobuses,

ommercial vehicles in Mexico are normally classified by weight :

ight (Ligero) 6,350 – 8,845 kg

esados account for just over 70% of the total domestic market.

he Key Players

ocal production is dominated by the big American commercial vehicle

Tcommercial vehicle makers than in any other sector of the Mexican automotive industry. This probably reflects the very strong downturn in the USA market, where heavy truck sales in April fell by 36% year-on-year, thus accelerating an already-worrying trend. At the same time, there is only limited demand in the domestic market, where age and environmental demands on commercial vehicles are few. The first quarter production figures certainly appear to justify this pessimism – overall the sector was down 20% at 19,500 units, with only the bus sub-sector, which accounts for only 2% of total production, showing a positive gain. Mcompanies tend to rely on second-hand vehicles. ACamiones y Tractocamiones – represent the makers/importers of medium and heavy commercial vehicles, and their engines. As in the car sector, the membership is composed wholly of international names – Caterpillar, Cummins, Detroit Diesel, Freightliner, International, Kenworth, MAN, Mercedes Benz, Scania, Sterling Trucks, Volkswagen and Volvo. The commercial vehicle sector is more concerned than their car-making counterparts about the threat emerging from countries like India and China. The lack of emissions regulations for Mexican trucks leaves the market open to low-cost competitors. C LMedium (Mediano) 8,845 – 14,968 kgHeavy (Pesado) over 14,968 kg P T Lmakers, who account for 96% of total output. The top brands – familiar in the US market but not in Europe - are Freightliner, owned by Daimler Trucks, Kenworth, a division of Paccar Inc. and Navistar / Star, from International Trucks.

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For 2007, International Trucks was the largest local producer, although

the truck sector, around 15% of total sales are imported ; for buses,

nly in the bus and coach sector do European names have a

ne market sector in which there is virtually no local manufacturing

HE VEHICLE PARC IN MEXICO

effective licensing procedures make it difficult accurately to assess

their output of 32,454 units represented a 17% fall year-on-year. Daimler turned out 31,017 units with Kenworth a distant third on 14,224. Beneath the three market leaders, Ford, GM and VW all produce a small number of commercial vehicles alongside their passenger cars operations. Inthe figure is only 3%. (This, of course, refers only to new vehicle sales. Many used commercial vehicles cross the border from the USA through official or unofficial channels). Osubstantive presence. MAN, Mercedes Benz, and Volvo all assemble complete buses/coaches, as does a local competitor, Omnibus Integrales, who are linked with Brazil’s Busscar. Scania produce bus chassis. Despite suffering a 45% drop in production levels at their Tultitlan plant, Volvo remained the largest single coach producer in 2007, with a total of 393 units. The company is reported to be targeting new export sales in the USA and Europe to use spare production capacity. Opresence, but growing demand and competition, is light commercial vans. European-style “white vans”, and their derivatives, are becoming increasingly popular in Mexico for transporting both goods and people. In a sector where, ten years ago, Nissan had a virtual monopoly of the market, VW, Ford, Renault, Fiat, Chrysler, Toyota and Isuzu are all now offering competing modern, mostly diesel-engined, products. However, all the VM’s service this market segment with imported products. The only local manufacturing is undertaken by a Mexican company founded in 2004, and variously known as Giant Motors Latinoamerica or Mem Trucks Motors. Now based in Hidalgo, they assemble Toyota Hiace-based models. They have also recently concluded an agreement with China’s First Auto Works (FAW). T Inthe total Mexican vehicle parc. Best estimates suggest that there are approximately 10 million passenger vehicles on Mexico’s roads, including around 2 million pick-ups and light vans. This equates to one vehicle for every twelve people – a ratio well below that typically found in developed countries.

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However, this low ratio does not necessarily mean that vehicle demand

the period 1998 to 2005, new vehicle sales in Mexico grew annually

irbags offer an interesting illustration of the nature of the domestic

he Mexican car market is fragmented, with an estimated 310

The sale of upper segment and

will grow rapidly, firstly because a significant proportion of the population (40%) still live below the poverty line, and secondly because much of the lower-end demand is met by second-hand imports from the USA. This latter trend is likely to be boosted by new regulations which will, from 2009, remove any age restrictions on imported vehicles – a move that is extremely unpopular with the Mexican-based VM’s. Inby 6.9%. However, this trend has recently stalled. Figures were static in 2006, and fell back by 3% in 2007. Early predictions are that sales in 2008 will be – at best – stable at around 660,000 units. AMIA – the trade body representing the vehicle manufacturers – blames the level of interest rates (currently around 7.5%), but there is also a tangible lack of middle-class consumer confidence. Interestingly, the market sector showing the largest falls is the small sub-compacts. Amarket. It is calculated that around 25% of new cars sold in Mexico have airbags fitted as standard equipment. This percentage is low when compared with the American and European markets, but much higher than Brazil, where the figure is only 5%. Tdifferent models on sale. This is an accelerating trend - the range of options has increased by 22% in the last two years – reflecting the wider range of economical Asian models now on sale. General Motors and Nissan are disputing market leadership, with Ford, VW and Chrysler closely clustered together, and Toyota and Honda some way behind. No other brand attains a 2% market share.

Market share luxury cars has continued on an upwards curve, despite being generally confined to the major metropolitan areas. In 2007, the sector grew by 8.5% to nudge past 30,000. BMW sold 7,750 units (more than they achieved in the whole of Latin America) to claim 25% of the market. Other up-market European brands – Daimler with 5,700 units and Audi with 4,900 – also did well.

General Motors 21% Nissan 20% Ford 13% VW 12% Chrysler 11% Toyota 6% Honda 5%

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Top-Selling Models in Mexico

P assenger Cars N

issan Tsuru

GM Chevy VW Jetta Nissan Tiida VW Pointer P

ick-ups

N

issan Pickup

GM Silverado Chrysler Dodge Ram Ford F-2650 Ford Ranger S

UV’s

H

onda CR-V

Toyota RAV4 Chrysler Jeep Patrio

t

Ford Escape Ford EcoSport M

odern European-produced models are

largely absent from the list of Mexican best sellers. The exception is the Honda CR-V, although the GM Chevy is a derivative of the Corsa model

NEWCOMERS

exico is confident of attracting a new wave of investment from Mforeign automakers. Fiat are reportedly reviewing a Mexican production base (possibly adapting the local factory of the group’s agricultural subsidiary Case New Holland) as a route to re-introduce the Alfa Romeo brand to North America, whilst Hyundai may set up a facility in Veracruz.

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There are also expectation of new investments from the ambitious emerging automakers of China and Asia. China’s First Auto Works (FAW) is perhaps the most advanced, and will shortly start selling imported cars in partnership with retail and banking Grupo Elektra. This will be followed by a local assembly plant in Michoacan, producing low-cost models. Other Chinese manufacturers who have expressed an interest in Mexico are ZX Auto, in partnership with a new and untested American dealer group Chamco, and Geely, who claimed recently to have signed an MoU with an undisclosed Mexican partner to build a 300,000-capacity production plant. India’s Tata Motors are rumoured to be interested in a commercial vehicle investment. RECENT INVESTMENTS Recent investment programmes initiated by those automakers already established in Mexico include :

• VW : has announced a further $1 billion in the plant at Puebla • Chrysler : will spend $1.57 billion on up-grading plants at

Toluca and Ramos Artzpe, plus opening a new supplier park in Toluca. A new engine plant is scheduled for Saltillo

• General Motors : a new $650 million plant at San Luis Potosi,

to build compact cars

• Freightliner : will commission a new 30,000-capacity truck plant in Coahuila from early 2009

• Ford, in partnership with Getrag, will set up a new transmissions

plant in Guanajuato

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THE COMPONENT SECTOR IN MEXICO

As has been seen in previous chapters, Mexico is well established as a production base for global automakers. There continues to be a steady rise in production volumes, which contrasts markedly with falls in other NAFTA members. However, it is in the components sector that Mexico – and Mexican companies – make their most significant contribution to the automotive industry. The growth of Mexico’s component industry has been largely driven by global Tier 1 companies establishing local assembly and manufacturing facilities to supply automotive plants on both sides of the US/Mexico border. But, at the same time, a significant number of indigenous Mexican companies have managed to establish themselves as first-level suppliers to those same VM’s, with an extensive range of products and quality accreditations. In 2007, Mexico produced automotive components to an estimated value of almost $30 billion, representing four years of consistent growth in the sector and an overall increase of almost 50% on the total achieved in 2000. Quality standards have also risen significantly. Recent figures show that Mexico boasts 947 manufacturing sites that have achieved TS16949 accreditation – substantially more than the total for the UK. Geographically, the industry is concentrated in the central states – particularly Mexico Federal District, Puebla and Queretaro – and in the northern states (e.g. Chihuahua, Coahuila, and Nuevo Leon) which offer the best access to the USA. INA – Industria Nacional de Autopartes – is the main representative body for the Mexican component industry. Overall, business is reported to be still buoyant, with OE sales growing at a steady 4%. Whilst it is claimed that Mexico can supply the full range of automotive component, the association does identify a need for increased training and development capability amongst local firms. It is not, however, clear how the provision of these services would be funded. The provision of new / up-dated machinery and tooling, particularly to tier 2 and 3 suppliers, together with the need for better logistics services were other identified areas of opportunity,

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Key Global Players From a recent listing of the top 300 component suppliers in Mexico, over 30% were American owned or financed. The European presence was heavily dominated by Germany, with 42 representatives – a reflection of VW’s well-established presence in the market. Japanese investment in the component sector is comparatively modest, and noticeably concentrated around the vehicle assembly plants in Aguascalientes and Baja California. The companies interviewed for this report, some of whom are profiled below, constitute a representative sample of the major global players located in Mexico. The interviews revealed a number of common trends, including :

• Confidence that they would not be adversely affected by the down-turn in the American vehicle market. Generally, they expected to benefit from additional work being sent south of the border

• Belief that they were not greatly threatened by competition from India and China

• Concern at rising utility costs, particularly electricity Delphi Mexico is a major manufacturing base for Delphi. The company has over 50 plants, predominately in the northern states of Nuevo Leon, Coahuila and Chihuahua, and it claims to be the second largest private employer in Mexico. Although all sectors of the company’s extensicve components portfolio are represented in Mexico, a significant proportion of their local manufacturing capacity is committed to electrical harnesses and switchgear. Delphi’s Mexico Technical Centre (MTC) in Ciudad Juarez was the first research and development facility that the company opened outside the USA. Visteon Visteon have 13 manufacturing sites in northern and central Mexico, principally producing vehicle interior fittings, lighting and climatic control systems and electrical modules.

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They supply to all the Mexico-based vehicle manufacturers, and export to the USA, Canada, Japan, Europe, South America, Australia and the Philippines. Additionally, for the local aftermarket they produce info-tainment systems, air-conditioning units and re-manufactured rotating electrics. In total, Mexico accounts for 19% of Visteon’s global production. A technical centre was opened in 2004 in Chihuahua State. Its 250 engineers are focused on electronic product development. The centre also houses a 50-strong purchasing team, which handles around 40% of the company’s North American buying requirements, particularly small stampings and turned parts, interior plastics, seals and gaskets, and switches and sensors. Visteon report an excellent level of staff retention at the technical centre, because there are few competing facilities in Mexico. They also have co-operative projects with local engineering schools. Denso

Denso have two major facilities in Mexico, at Apodaca, in Nuevo Leon State and at Guadalupe. The main products include instrument clusters, air-conditioning and radiator units, cruise controls and fuel valves and sensors.

The plants have full QS, ISO and TS16949 accreditation, and supply to customers globally. Approximately 15% of production is for local assembly plants, 20% is exported to Japan (equivalent to 8 TEU’s per week), and the majority is destined for the USA, where they have over 40 customers. They have no significant business with South America.

Product development, and purchasing, is ultimately controlled through the group’s operations in Japan and America. However, the Mexican division would like to reduce the number of imported sub-components that they currently use, preferably through more of Denso’s global suppliers establishing a presence in Mexico (see Key Conclusions and Business Opportunities). Magna Powertain Magna has 16 manufacturing locations in Mexico, producing 180,000 transmissions and a similar number of rear and heavy-duty axles each year. Other divisions produce body stampings and sub-frame assemblies. Roughly half the output is destined for the USA. Key customers include Chrysler, VW and BMW. They have a local design department to support product development.

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Magna import components from a wide range of tier 2 suppliers, with shipments coming from the USA, Korea, Spain, France, Germany, Austria, Hungary and the Czech Republic. Johnson Matthey Johnson Matthey’s facility at Queretaro supplies catalyst cores for VM customers in both Mexico and the USA, including Chrysler, Ford, VW, Nissan/Renault and Honda. 20% of production is consumed locally, the balance is exported to the USA. The plant expects to win additional orders, as more work is out-sourced from the USA to Mexico. However, in common with other component makers, rising electricity prices are a subject of concern. NPL Now part of the global Arrk Group, UK-based NPL Technologies established a joint venture in Saltillo in 1979 to supply injection moulds and tooling to local foundries. The JV – NPL-Ditemsa – now has 300 staff, including four English managers, and achieved sales of $24 million in 2007 – a 30% increase on the previous year. 90% of sales are made to local Mexican customers, such as Cifunsa, Newmak and Tafima, who predominantly used the equipment for manufacturing automotive components. NPL are optimistic that they will gain additional business from existing customers, as more automotive production is transferred from the USA to Mexico. They believe that their expertise and service offerings negate any cost disadvantages in comparison to Chinese and Indian competitors. However, they are concerned about increasing electricity and water costs in Mexico, and have also found it difficult to recruit skilled workers, such as pattern makers. Ficosa International Ficosa of Spain has been operating in Mexico since 1995. Today, it has two manufacturing sites at Salinas Victoria and Escobedo (where there is also an R&D facility), making a diverse range of automotive components including brake and drive cables, gearshifts, washer systems, mirrors, door locks and antennas.

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80% of production is exported, to clients including GM, Ford, Honda, VW, Mercedes as well as the Spanish parent company, although export volumes have fallen recently. As a consequence of their wide product range, they also import a high volume of sub-components, principally from Brazil, China (where there is a group factory), Spain, Germany and the USA. Cost is the principal purchasing consideration, and they make heavy use of the Internet. Rising energy costs are a concern for the Mexican business. Most research and development work is undertaken at technical centres in Spain and the USA. Coopers Standard Automotive The American makers of fluid handling systems, rubber sealings and vehicle trim have three main plants in northern and central Mexico, plus some smaller facilities. Although 80% of production is sent back to the USA, they also export to China, where indigenous automakers FAW, Chery and Geely are major customers. Research and development work is conducted in the USA. Locally, Coopers are seeking to identify new suppliers of metal stampings, machined parts and painting processes. Key Domestic Players As has already been noted, there are a number of domestic “heavyweights” amongst Mexico’s component producers. Generally, these companies - a selection of whom are profiled below – have long local traditions, based on metal working processes, and have gradually built up their automotive product portfolios to meet the requirements of American customers. Sanluis Rassini Sanluis Rassini, whose corporate history can be traced back to the 1930’s, is today a supplier of suspension parts (leaf springs, coil springs and torsion bars) and braking components. They have five production facilities in Mexico, and further plants in Brazil and the USA. These are supported by a technical centre in Michigan. In 2004, a liaison office was opened in Stuttgart to service European customers.

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Sanluis claims to supply components to more than 50 vehicle platforms, with the three major American automakers accounting for 74% of their business. Other VM customers include Nissan, BMW, VW, Mitsubishi, Honda, Toyota and Volvo, and they also serve major tier 1’s such as American Axle, Dana, ZF and Benteler. More than 75% of their production is exported to the USA and Canada, with 15% going to local plants and the balance being exported to South America and Europe. One area of concern must be their dependence on the American light truck market, which accounts for around three-quarters of total sales. However, the company remains confident that their product portfolio is sufficiently diverse to weather the rapid downturn in this sector of the market. Sanluis is keen to develop its status as a full service provider. It has invested heavily in testing facilities and has technological alliances with international partners such as Brembo and NHK Spring Co. They are open to further technical co-operation with other European companies. They also need to source production tooling from outside Mexico. Metalsa Metalsa, headquartered close to Monterrey and originally established in 1956, is a producer of chassis frames, structural stampings and fuel systems. They have three plants in Mexico, and additional factories in the USA (at Roanoke) and India. These are supported by a technical centre in Michigan. They have no permanent presence in Europe. 90% of production is exported to the USA, where clients include Chrysler, GM, Nissan, Toyota and Freightliner. In that market, their major competitors are Dana and Magna. Most of their production machinery comes from German and Spain, with additional tooling from the USA, Canada and South Korea. They are seeking to upgrade their facilities with new presses and feeding machines, and welding stations. Laser-welding is an area of particular interest. Product development work can be undertaken in-house. Recently they assembled a vehicle prototype to a UK design engineering company.

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Sisamex Sisamex – Sistemas Automotrices de Mexico – was originally set up as a collaborative venture between Dima, Rockwell International and Nacional Financiera. It is now part of Grupo Quimmco, a diverse industrial conglomerate. Unlike the two companies profiled above, the group’s automotive business is conducted as a joint venture, with American Axles. They produce heavy duty axles and brakes for customers such as Freightliner, Parker International, Volvo, Mack and Mercedes. 70% of production is exported, largely to the USA. Sisamex holds TS16949 accreditation. The company is surprisingly optimistic about future business prospects, and expects work from (unspecified) new customers to compensate for the downturn in the US truck market. A range of sub-components are imported. They have a particular need for steering arm parts and forgings. Cifunsa Cifunsa is the automotive arm of GIS (Grupo Industrial Saltillo), a diverse conglomerate with interests in building materials and housewares. The automotive business is focused on the production of engine blocks and cylinder heads, plus a range of smaller metal (iron) castings such as steering knuckles, crankshafts and exhaust manifolds. Founded, in 1932, in Saltillo, the company now has five factories in Mexico, serving a client base which includes Chrysler, GM, Daf Trucks, John Deere, Toyota, VW, Magna, Bosch and Delphi. Additionally, in 2007 they set up a joint venture facility with Caterpillar under the Technocast brand, dealing exclusively in diesel engine blocks. Their in-house design facilities enable them to offer clients full computer simulation and rapid prototyping for future product development. In CEFOTEC – a private technical training centre – they have their own resources for training engineers and technicians. Cifunsa reported a noticeable drop in business in 2008, and also increasing cost competition from China.

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Nemak Part of the ALFA industrial group, Nemak is a global player in the development and manufacture of aluminium automotive components. The principal products are cylinder heads and engine blocks, supplied to the major automakers in the USA and Europe, but they have also produced aluminium suspension parts for Toyota. Core competencies include precision sand casting and high-pressure die casting. The company has been established in Mexico for 27 years, with six plants in the northern states, but, in recent years, it has achieved rapid international growth by acquisition. For example, it has gained a substantial European presence by purchasing from Norsk Hydro plants in Germany, Sweden, Hungary and Austria. Most recently, it bought a casting plant in Nanjing, China from Teksid. Other sites are located in Brazil and Argentina. 60% of output from the Mexican plants goes to the USA, but they also export to UK, China, Australia and Latin America. The production facilities are supported by technical centres in Monterrey, Linz (Austria), Dilligen (Germany), and Poland, which offer full product development capabilities. Grupo Bocar Grupo Bocar traces its origins in the automotive sector back to 1967. Today, its three industrial divisions make a wide range of components. Under the Auma brand, it produces aluminium and zinc castings. The Plastic Tec division specialises in moulded plastic engine parts and interior trims, whilst Bocar itself is synonymous with fuel systems, pumps and complex components. Bocar has five manufacturing plants in Mexico, and sales offices in the USA and Germany. Of their $480 million annual sales, 90% is exported, and they have a very wide portfolio of global VM and tier 1 customers. They hold TS16949 accreditation. Technical centres support each manufacturing division, and they also have research links with universities in Mexico, USA and Germany. Bocar are confident that they have all the resources to service the present and future needs of global customers, and are not actively seeking international partners.

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Interfil S.A. Interfil produces 12 million automotive filters per annum, with a sales value of $25 million. Unlike the other Mexican component makers profiled here, the majority of production is sold into the aftermarket through their national network of 50 distributors ; only 10% goes to OE production, with a further 20% distributed through the OE manufacturers’ own post-production sales. Interfil has TS16949 accreditation. Existing OE clients include Ford, GM, Nissan, VW, Johnson Controls and Mahle, and negotiations are underway to supply Tata in India. Interfil hope to achieve annual growth of around 6%, and have recently opened a new plant to make heavy duty diesel filters. However, sales were flat in 2007, and showed a 15% drop in the early months of 2008. In particular, the company fears that it is losing sales in the US aftermarket to Chinese competitors. It is also concerned that its production machinery and technology is dated and that it lacks in-house engineering expertise to conduct extensive new product development. They would welcome European partners who could offer expertise in this area. Oil and electricity costs are also rising. One bright spot is the growing influx of used vehicles imported from the USA, which, in turn, increases the requirement for replacement parts. It is interesting to note how Interfil - predominantly an aftermarket supplier - has differing experiences and future perceptions of the market compared to those component makers that principally service OE clients. Business Opportunities Generally the companies interviewed felt that the range and quality of the components already produced in Mexico offered few opportunities for direct import sales into the market. Indeed, there was the expectation that even more European companies would localise production in Mexico to counteract the current exchange rate imbalance. The most frequently mentioned opportunity was for the provision of production machinery, plus tool-making and mould-making expertise. There was also a clear feeling that Mexico needs to develop its indigenous engineering expertise.

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Employment and Wage Levels in the Component Sector There was a wide variation in indicative wage rates quotes by the interviewed companies. The majority fell within the following range (all figures in US Dollars, per month) : Production Worker $ 250 – 1,000 Supervisor $1,000 – 1,500 Manager $3,000 – 6,000 Director $6,000 – 8,000 There was an even greater discrepancy in the figures quoted for sales executives, which ranged from $1,500 per month in the aftermarket to $8,000 for an OE account executive. The latter salary perhaps reflects a considerable local skill shortage in the higher echelons of marketing and sales. The actual costs to employers can be considerably raised by bonus and social payments. One European investor reckoned that these costs added up to 60% to his total wage bill. Company loyalty appears to be high at senior level, but production workers are reportedly quick to switch jobs, especially in the northern states which are more sparsely populated. Employers also commented upon the difficulty in terminating employment contracts. A Note on the Mexican Aftermarket Although an in–depth analysis of the Mexican aftermarket is not within the scope of this report, it is appropriate briefly to highlight the size and diverse nature of this important part of the national automotive industry. ARIDRA – Asociacion Nacional de Representantes, Importadores y Distribuidores de Refacciones y Accesorios para Automoviles – lists over 600 local manufacturers and 1200 distributors of aftermarket parts, accessories and equipment. These companies serve a passenger vehicle parc of around 10 million, with approximately 1 million used vehicles changing hands each year. A substantial proportion of these vehicles are imported over the US border - either officially or as illegal “carros chocolate.” This regular influx of used vehicles means that the Mexican vehicle parc has a comparatively high age profile. Since there is no national MoT equivalent, owners are under less obligation to service, and replace, vehicles on a regular basis.

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Additionally, Mexico can present challenging driving conditions, with unpaved “terrazeria” common in rural areas, and Mexico’s city roads populated with ferociously-steep “topes” or speed humps, both of which impose extra strain on vehicle systems and components. It is, therefore, not surprising that the total aftermarket is estimated to be worth $11.6 billion. However, the scale of this apparent opportunity for UK-based aftermarket suppliers is restricted by various local market characteristics. Firstly, Mexican consumers and service centres are very cost conscious. There is a national mentality to repair, rather than replace, that constrains the demand for high quality spare parts. Small garages and workshops are more popular than sophisticated nationwide service centres. US models account for the bulk of the vehicle parc, resulting in less demand for European-model compatible components. Furthermore, the high localisation levels of the VM’s mean that Mexico-based suppliers are already available to supply OE-quality components into the aftermarket. It is in the aftermarket sector that the threat from low-cost Asian producers is most keenly felt. For example, Interfil S A, which manufactures 25 million filters per annum for both OE and aftermarket customers, reported that domestic sales were flat in 2007, and that they were meeting increasing competition in the USA from Indian and Chinese rivals. The best opportunities would seem to lie in products supplied as sealed units, and the diagnostic equipment required by modern engines. For example, there is a shortage of expertise and equipment for maintaining fuel injection systems. Somewhat aside from the mainstream aftermarket is the speciality equipment market, focusing on products that customise or up-grade, rather than simply maintain and repair, vehicles. Vehicle customisation is relatively popular amongst Mexican motorists, with lighting and audio accessories, speciality wheels, pick-up bed covers and tool carriers all in demand. Security systems also sell well, reflecting public concerns about vehicle theft and personal safety. In this segment of the aftermarket, which is worth around $1.1 billion, imported products from the USA are the most popular, though European brands are rated above cheaper competitors from Asia and Latin America.

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Author researching the Mexican aftermarket

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Diversification into Aerospace There is an emerging pattern of increased aviation component manufacturing in Mexico, to serve end-customers in the USA. Present levels are comparatively modest, accounting for only 2% of the $25 billion that the US aerospace industry spends each year on imported parts. However, there is a steady trickle of American aerospace companies setting up production plants in Mexico ; and this trend is likely to accelerate with the conclusion of a bilateral safety agreement with the US Federal Aviation Administration, which will ultimately allow manufacturers to self-certify components from their Mexican factories without the need for additional safety checks on importation into the USA. The aerospace sector is seen, in some quarters, as a new opportunity for Mexico to move up the skills chain and to replace some of the manufacturing capacity lost in other industries, including automotive, to cheaper Asian rivals. For example, in the central state of Queretaro, which ten years ago was attracting high levels of automotive investment, General Electric Co and Bombadier are two of the founding partners in a new $100 million aerospace park. It appears, however, that most of the enthusiasm for diversifying into aerospace is coming from overseas investors and regional governments. In the interviews conducted for this report, no Mexican automotive component manufacturers expressed an intention to seek new customers in the aviation industry. These findings tally with the view of the Society of British Aerospace Companies (SBAC), who sees the sector’s local growth driven primarily by cost-saving exercises initiated by American corporations rather than by industrial demand in Mexico. Recent Investments Recently announced investments by automotive component makers include :

• Toyoda Gosei : new body sealing components plant in San Luis Potosi, to be operational from October 2008. Principally supplying to US-based car plants

• Lear : new investment in Villa Ahumada, Chihuahua, for supply

into USA

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• CIE : the Spanish component producer, which operates six plants in Mexico is buying out their local JV partner, Kuo Automotriz

• Meridian Automotive : a fourth Mexican plant will be opened in

Saltillo, producing glass fibre roofs and panels for Freightliner

• Fuel Systems : another Freightliner supplier, planning to manufacture aluminium tanks in the Coahuila region

• Jatco : will double investment in its Aguascalientes plant,

producing up to 800,000 CVT’s per annum

• Metalsa : agreed a new JV with Toyota to produce pick-up chassis in Nuevo Leon for export to the Japanese VM’s assembly plant near San Antonio, Texas

• Getrag, in partnership with Ford, will open a new transmissions

plant in Guanajuato

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INTERNATIONAL RELATIONS

Mexico boasts more free trade agreements than any other country. Since the mid-1990’s, it has signed deals with 44 countries, including the international trading giants of the USA, Japan and the European Union. It also has partially agreements with other states and trading blocks, including an automotive sector deal with key Mercosur members Brazil and Argentina. USA “Poor Mexico – so far from God, so close to the United States” The famous words of Porfirio Diaz neatly encapsulate both the dominating influence exerted, in all walks of life, by Mexico’s giant northern neighbour, and the uncomfortable feeling that many Mexicans have about the relationship. The extent of this influence is starkly illustrated by the economic numbers. Overall, the USA accounts for a massive 82% of Mexico’s export sales, and a little over 50% of its import purchases. These figures are actually exceeded in the automotive sector. In 2006, 88.5% of Mexico’s vehicle exports were destined for the USA. In foreign direct investment, the pattern is similar. 63% of all FDI into Mexico originates from the USA. Underpinning and intensifying the economic bonds between Mexico and the USA is NAFTA. NAFTA Since its initial implementation in 1994, NAFTA – The North American Free Trade Area – has had a profound effect on the Mexican economy, stimulating a five-fold growth in import/export shipments. Its perceived success has also prompted successive Mexican governments to pursue free trade agreements with other partners. But, at the same time, it has tied Mexico ever more closely the USA. Under the terms of the NAFTA agreement, there are no customs duties payable on automotive products manufactured in and moving between the three members countries – Canada, Mexico and the USA.

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However, it is important to remember that NAFTA is a free trade area ; it is not a customs union, like the EU. This means that goods imported into Mexico from the UK (which would be free of duty under the Mexico/EU free trade agreement) cannot simply be shipped on into the USA duty free. To avoid paying US customs duties, the goods must undergo sufficient processing in Mexico to be deemed to have acquired Mexican origin. The level of required processing is governed by a complicated set of rules, and should be checked on an individual product basis. However, for most automotive products, there are two basic requirements :

1) The processing should be sufficient for the product to undergo a change of tariff heading (as defined under the HS Code)

2) The processing must represent a specified percentage of the value of the finished product – typically 50% – 60%

The Mexican party responsible for re-exporting the goods must issue a certificate of origin specifying that these requirements have been met. It can clearly be seen that these regulations preclude the simple use of Mexico as a “back door” to ship European goods into the USA. To benefit from the NAFTA free trade rules, a processing/manufacturing facility in Mexico itself is essential. LATIN AMERICA Despite the cultural and linguistic links between Mexico and her Central and South American neighbours, the levels of economic activity are low. There is no country from those regions in the top ten of Mexico’s international trading and investment partners. Sales of Mexican produced vehicles in the region account for only 3.5% of total export shipments. This is despite the fact that the global VM’s have not been slow to exploit, for their own advantage, the free trade in vehicles between Mexico and Mercosur. Renault/Nissan, for example, currently exports the Mexican-built Sentra to Brazil, and will ship the low-cost Logan saloon in the opposite direction once Brazilian production commences. Toyota exports the Hilux pick-up from Brazil to Mexico.

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EUROPEAN UNION

The EU member countries account for a substantial proportion of Mexico’s total of 44 free trade partners. However, despite the removal of all tariff barriers for industrial goods, the volumes of automotive trade and investment flowing between Mexico and the EU remain comparatively modest. In overall trade flows, the EU appears to have benefited more, and now accounts for around 20% of total Mexican imports. In the opposite direction, the EU takes 8% of Mexico’s exports, including a similar percentage of vehicle exports. The first quarter of 2008 showed a 56% increase over the same period last year, perhaps reflecting the current disparity between the Euro and the Peso/US Dollar. Germany and Spain are the major trading partners. The EU contributes over 20% of total FDI into Mexico, but the levels in the automotive sector are much lower. Of 80 significant European automotive investors identified in a recent survey, 42 were German, 16 were French, and only 5 were from the UK. The interviews with Mexican automotive suppliers also revealed only limited links with Europe. A number had, in the past, quoted for European business, but with little success. It remains to be seen whether the current strength of the Euro against the Peso will present new opportunities in Europe for Mexico’s component makers. ASIA Japan In September 2004, Mexico became only the second country in the world to conclude a free trade agreement with Japan. The deal, which came into effect on 1 January 2005, provides for an immediate increase in the quota of duty free vehicle imports into Mexico, with a complete elimination of tariffs within seven years. Although the two countries are established trading partners (Japan is the No 3 global exporter to Mexico, and, in the automotive sector at least, a source of substantial inward investment), the FTA negotiations proved particularly difficult, with Japan concerned about exposing its agricultural sector to cheap Mexican produce, whilst Mexico feared that a summary removal of industrial tariffs might encourage Japanese companies to ship goods from their home production bases rather than continue to invest in local manufacturing.

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China Despite a recent claim by Chinese Premier Wen Jiabao that “China and Mexico are partners instead of competitors”, the reality is that Mexico has not engaged closely with China, and a national fear persists that China will take jobs and markets from Mexico. Certainly, Mexico has a worryingly large trade deficit with China – the official figure of $5.6 billion is probably an understatement – and Mexican products account for less than half of one percent of Chinese imports. In sectors such as textiles, footwear and toys, Chinese competition has already forced the closure of many Mexican production facilities. Mexico has filed over 90 WTO anti-dumping complaints against Chinese companies. In the automotive sector, Mexican aftermarket suppliers are already finding themselves under pressure, in both their domestic and American markets, from Chinese rivals. However, the interviewed OE suppliers were generally dismissive of the Chinese threat, citing inferior quality standards and their own, established position within the North American automotive supplier chain. This may prove over-complacent, reflecting the fact that the Mexican industry is not closely engaged with China and under-estimates the speed with which Chinese companies can move up the supply chain. One area in which Mexico is actively wooing Chinese automakers, is as inward investors. FAW are already expected to establish an assembly plant, initially making a small car priced in the $6,000 - $10,000 range. Geely is another potential target.

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INVESTMENT IN MEXICO

The Importance of FDI to Mexico Mexico’s recent economic growth has been largely built upon inward investment ; and the automotive sector has been one of the largest beneficiaries. In global terms, the levels of investment flowing into Mexico are comparatively modest. The figure for 2007 - $23.2 billion – was well above the annual average of $17.2 billion which Mexico has received since entering NAFTA, but it still only represents only one-fifth of the funds invested in the UK, and leaves Mexico well behind China, Russia and even Brazil in the international league table. The spread of investment was also very uneven, with over 60% originating from the USA and Canada. 48% of inward investment was directed into manufacturing, and 54% went into greenfield sites. These figures starkly illustrate that Mexico is still widely regarded as a cheap manufacturing base for the American market. Nevertheless, attracting FDI remains a key building block in the government’s economic strategy, and it appears to be the principal objective of both central and regional authorities when approaching foreign companies. At both national and state level, there are well-resourced agencies available to advise potential investors – although, of course, their advice may not be wholly impartial ! Current Patterns of Investment Investment programmes are organised on a regional, rather than a national, basis. There are currently no centralised tax incentives for foreign investors, although there are national tax credits of up to 30% allowable on R&D expenditure and funding for the engagement of specialist engineers. Individual states can offer their own grants and inducements which can include infrastructure funding, partial or total relief on payroll and property taxes, training scholarships and support in conducting environment studies and obtaining construction licences. The incentive levels tend to reflect the states’ relative need to attract investment. Some of the most attractive options are presented by central and southern states, but these have to be matched against their comparative lack of infrastructure and remoteness from the main automotive centres and the all-important American market.

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Under Article 27 of the Mexican Constitution, restrictions still remain on foreign investors obtaining direct control over land situated within 100 km of the national land borders or 50 km of the coastline. Operations within these areas will normally require the participation of a Mexican partner. Location is certainly a key issue for potential investors. In addition to assessing infrastructure and ease of access to end customers, attention must also be given to the availability of labour. 40% of Mexico’s population is concentrated in the central states of Mexico City, Mexico Federal District, Veracruz, Jalisco and Puebla. The northern states, which offer the best access to the American market are more sparsely populated. Whilst labour migration is a feature of Mexican life, relocating workers can involve an employer in additional “social” costs, which add substantially to the total wage bill. Other concerns raised in interviews with automotive investors included the high cost of electricity, and inflexible labour laws that make employment termination difficult. Automotive Investment Clusters The leading regions for automotive investment are in North and Central Mexico. Despite the incentives now on offer, few industry investors have been attracted to the southern states (i.e. south and east of Puebla). To the north, the border states of Chihuahua and Coahuila, and nearby Nuevo Leon, all host substantial, well-established automotive clusters. The majority of companies in this region are either American or Mexican owned. Toyota’s investment in Baja California has also lead to an increase in automotive investment in that state.

Industrial Costs in Mexico Promexico – the government agency responsible for investment promotion – publish annually “Industrial Costs in Mexico - A Guide for Foreign Investors”. Locations and costs are analysed on a regional basis. Copies of the 2007 and 2008 editions are available at SMMT.

The central belt is more heavily populated with European investors, the majority of whom are German. This trend can be explained by the presence of VW in Puebla. Similarly, there is a “hot-spot” of Japanese suppliers in the small state of Aguascalientes, supporting the local Nissan plant.

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Overall, there appears to be a gradual northward drift, with new arrivals favouring more northerly locations. The central state of Queretaro, for example, has lost a number of automotive investors and is now re-focusing its efforts on the aerospace sector. The Maquiladora Programme The original concept of the Maquiladora (literally “making up” or “assembly”) programme, which pre-dated NAFTA, was that approved companies could import raw materials and production machinery into Mexico, process them in approved plants/locations, and re-export the finished products without paying import taxes. They could not, generally, sell the final products on the Mexican market. Starting in the textile industry, the model quickly spread into other sectors, including the electronics and automotive industries. Most maquiladora activity (over 75% of approved plants) is naturally centred on Mexico’s northern states, which offer the easiest access to the American market. This includes most of the 313 automotive maquiladora factilities identified in 2006. Over the years, the nature of the programme has evolved, and some regulations have been partially relaxed (e.g. the ban on sales into the domestic market). However, it remains a key feature of Mexico’s industrial landscape. Whilst overall plant and employment numbers have declined since 2000, the value added by maquiladora processing has risen by 83% over the same period. The automotive sector tops the list in this criterion. Since the introduction of the IMMEX Decree in late 2006, the maquiladora programme has officially been subsumed into Mexico’s broader trade and investment policies.

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Foreign Direct Investment (by origin)

63%

3%

26%

8%

USA / CanadaUKRest of EUOther

Foreign Direct Investment (by sector)

48%

26%

5%

21% Manufacturing

Financial Services

Transport &CommunicationsOther

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LOGISTICS AND INFRASTRUCTURE

Overview Cheap fuel prices – diesel currently costs around 35p per litre, petrol 45p – and the ready availability of low-cost labour can create the illusion of low transportation costs within Mexico. However, these advantages are offset by the size of the country and the heavy tolls levied on vehicles using the network of motorways and principal roads – collectively referred to as “cuortas.” As a result, logistics costs must not be under-estimated in deciding both production locations and distributor agreements to serve local customers. Similarly, there are additional cost and time factors to be considered when planning to supply into the USA from Mexico. Mexican trucks are not yet welcome on American highways, and there can be delays of 1 -2 days at the border whilst tractor units are exchanged.

Typical Transit Times There are well-developed transportation networks linking the main automotive centres, but it is still necessary to build in extra time when planning delivery schedules. Typically quoted transit times are :

Monterrey – Puebla 1/2 days Monterrey – Kentucky 4 days Monterrey – Detroit 7 days

The main entry points for sea-freight consignments from Europe are the east coast ports of Veracruz and Altamira. The voyage from UK ports take 14 days ; therefore, allowing a further seven days for the completion of customs formalities and transportation to final destination, the overall door-to-door transit time between the UK and Mexico is approximately three weeks. Typical Transportation Costs

Ocean freight costs from F0B Felixstowe to arrival Veracruz are in the region of $1200 per 20’ container, plus a fluctuating BAF of $750. A 40’ container would cost $1575 + $1500 BAF. On-carriage costs are quoted at $670 to Puebla, and $720 to Monterrey. Post handling and customs clearance costs have to be added to these figures.

For full-truck shipments to Detroit USA, typical costs would be $3500 from Monterrey or $3785 from Puebla.

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Customs Procedures

Customs clearance procedures in Mexico are not yet fully computerised. For goods arriving from Europe, the average “dwell-time” quoted for clearance procedures is 5 days for sea-freight shipments and 2/3 days for consignments arriving by air.

Import shipments are liable for VAT at the standard rate of 15%, unless they are destined for certain approved border processing areas, where the rate is reduced to 10%. Special Economic Zones

The opportunity offered by the maquiladora programme (q.v.) has caused Mexico to be slow in establishing the kind of Special Economic and Free Trade Zones familiar in other developing countries, where imported goods can be processed or warehoused without payment of customs duties. It was only in 2002 that Mexican fiscal laws were amended to permit the creation of free trade zones. The first zone – centrally located close to San Luis Potosi – was officially sanctioned in August 2004. Infrastructure Plans

The Mexican government – at both national and provincial level – recognises the need for substantial upgrading of the country’s infrastructure if it is to continue to attract foreign investment, and, in particular, develop the poorer southern states. The World Economic Forum currently places Mexico 64th out of 125 countries in terms of the competitiveness of its infrastructure.

Ambitious plans for the period up to 2012 envisage :

• Modernising 17,600 kms of highways. • Building 1,400 km of new railway track and removing many

existing bottlenecks (currently Mexico’s trains run at an average speed of less than 25 kph).

• Constructing 4 new port facilities and up-grading 23 existing sites to raise cargo handling capacity to 7 million TEU’s.

• Building 3 new airports and expanding 31 existing ones, in the process increasing air cargo capacity by 50%.

The current surge in oil prices has presented the Mexican government with additional revenues, as a result of which public spending for the first quarter of 2008 increased by 9.5%. However, the achieving of all the infrastructure objectives will require substantial private, as well as public, financing. It seems unlikely that all the targets can be met.

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KEY CONCLUSIONS AND

IDENTIFIED AREAS OF OPPORTUNITY

KEY CONCLUSIONS & RECOMMENDATIONS ON THE MEXICAN AUTOMOTIVE INDUSTRY “Mexico is all about manufacturing” This comment, from a senior VM executive, neatly encapsulates Mexico’s current status and position in the global automotive industry. The international vehicle and component producers regard Mexico as a cost-effective manufacturing base adjacent to the world’s largest auto market. It is a role that successive Mexican governments have been happy to support ; and the automotive sector is a major contributor to the country’s overall GDP. As a result, Mexican has a well defined, and secure, position within the broader North American automotive industry. At present, there appears to be only limited attention paid to either broadening the indigenous skills base into – for example – vehicle design and engineering, or to developing Mexico’s own internal automotive market. Interestingly, the same emphasis on manufacturing appears in Mexico’s burgeoning aerospace industry. Recent figures produced by ProMexico show that, out of 186 registered Mexican aerospace operations, 147 were engaged exclusively in manufacturing, with 25 focused on MRO (maintenance, repair and overhaul). Only 14 of the companies conducted engineering and design work. This suggests that, even in a comparatively new industrial sector, Mexico is reluctant to move beyond manufacturing operations. The attraction of manufacturing investment remains a key policy focus for the Mexican government. At both national and provincial level, substantial funding and effort is committed to winning new inward investors. There appears to be considerably less commitment to raising skill levels and creating indigenous engineering and design expertise. Although the importance of climbing the skills ladder was clearly recognised – particularly within the industry associations – there appears to be little public funding available to support training and development programmes. The larger indigenous companies, in the main, use their offices and partners in the USA to train their engineering staff.

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Inward investment is the key to exploiting Mexico’s position within the North American automotive supply chain Mexico does not offer a cheap “back-door”, through which European companies can enter the US market. The NAFTA Rules of Origin require that automotive products, imported into Mexico, be substantially modified or re-worked before they can be re-exported free of duty to the USA. Therefore, a company which hopes to break into the North American automotive supply chain through Mexico must realistically either establish its own local manufacturing facility or enter a joint venture with a Mexican partner. Whether the potential duty saving (typically the rate for automotive components is a modest 2% - 4.5%) and Mexico’s lower production costs are sufficient to offset the required investment is a calculation which needs to be carefully examined in each individual case. However, only companies who can sustain the initial investment costs are likely to be able to take this route into NAFTA. Nor does a manufacturing base in Mexico guarantee sales north of the border. It will still be necessary to develop a marketing presence in the USA. Companies planning to export to Mexico must also remember that, to qualify for duty free entry under the EU/Mexico Free Trade Agreement, their products must be either “wholly produced” or “sufficiently transformed” within the EU ; the goods cannot simply be imported from a third country and then re-exported to Mexico. Full details are contained in the HMRC Public Notice 832. The Mexican automotive industry will continue to resemble an inverted triangle Mexico’s automotive industry has grown from the top down, through the arrival of large global vehicle and component manufacturers, rather than upwards from a native engineering base. Alongside these major foreign investors, a small group of indigenous industrial groups have managed to establish themselves as tier 1 suppliers. As a result, the industry is top heavy and structurally weak at tier 2 and tier 3 levels. The reliance on outside investment means that this imbalance is unlikely to change.

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Despite this generic weakness, there was not much evidence, amongst those interviewed, of active programmes for either local supplier development or alternative sourcing. Most respondents felt that they “had what they needed.” European companies seeking to exploit the limitation of Mexican tier 2/3 supplier will need to pursue an aggressive on-going marketing strategy, and be able to demonstrate price competitiveness with sub-suppliers located in the USA. Current exchange rates are an added difficulty. Mexicans are optimistic : but are they marking time ? Mexicans are, by nature, optimistic people, and, amongst the companies and organisations interviewed, there was a strong majority that viewed Mexico’s automotive future with optimism. Although greater caution was expressed in both the commercial vehicle and aftermarket sectors, the consensus of local opinion was that the industry would continue on an upward curve, and that the risks of a downturn in demand in the USA were outweighed by the likelihood of additional work being transferred south of the border. Similarly, the rising automotive powers of India and China were viewed less as competitors than as likely sources of additional inward investment. In view of Mexico’s established role in the North American automotive industry, and with pending automotive investments worth $4.4 billion, such optimism is understandable. However, it must be questioned whether Mexico fully appreciates the probable scale – and consequences – of the down-turn in the USA. This will be the first time since Mexico entered NAFTA that her principal customer has experienced negative growth. Similarly, local opinion may well under-estimate the threat from the emerging Asian economies, and their ability to quickly climb the quality ladder. In some sectors – for example, textiles – Mexican producers have already lost the battle against these new rivals. It is also questionable whether the Chinese VM’s now being courted as future investors will be willing to source components from the local supply chain in the way that the established automakers have done. Their record in other markets shows a strong preference for “screwdriver” plants principally assembling imported kits. In maintaining a potentially over-optimistic view of the future, and continuing a business strategy that relies largely on attracting manufacturing investment, there lies the danger that Mexico’s automotive industry may stagnate (as, to a degree, it did between 2001 – 2005), and may fail to equip itself with the skills and products necessary to face new challenges.

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Mexico needs to diversify…………… Mexico’s automotive success has been built on a comparatively restricted business model – serving one principal customer (the USA) and manufacturing / assembling a limited number of products. To ensure continued growth – particularly when the leading customer is in recession – the local automotive industry needs to diversify in various fields :

• Markets served : Despite a plethora of free trade agreements, the Mexican automotive industry remains largely tied to American demand. It has not yet created a significant relationship in Europe or Latin America, and the domestic market remains under-developed

• Product range : Whilst Mexico is very strong in – for example –

metal working, chassis building and plastic forming, there are significant gaps in the product range. A notable example is electronics and sensors, which are making up an increasing percentage of a modern vehicle’s value

• Skill set : Local engineering, design and development skills lag

behind the level of manufacturing expertise that the country has acquired. Although there is some recognition that this gap needs to be addressed, there is no investment in resolving the problem. This leaves Mexico in danger of being overtaking by emerging Asian rivals

• Forms of partnership : Currently the emphasis is on continuing

to attract inward manufacturing investment. Potential foreign partners who offer other forms of co-operation – e.g. technology transfer and training – are less enthusiastically received

……..but Mexico does not look naturally to Europe Over 80% of Mexico’s international trade is with the USA. Even allowing for that statistic, it was surprising how strongly business with America dominated the comments of the interviewed companies, and how little reference was made to ties with Europe. Even where commercial discussions had taken place and quotations had been submitted, the volume of actual business seemed low. This suggests that, on both sides, the desire to develop partnerships is lukewarm. Germany, as the perceived centre of the European automotive industry, and Spain (probably for cultural and linguistic reasons) were the most frequently mentioned partners. Contact with the UK industry was comparatively limited.

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GENERIC BUSINESS OPPORTUNITIES For overseas companies able and willing to make a substantial investment in establishing local manufacturing production, Mexico is a willing, and accommodating, recipient, who can offer an established place in the North American automotive supply chain. For companies not wishing to pursue that business model, the best, immediate opportunities appear to lie in the supply of production machinery and tooling to serve Mexico’s buoyant manufacturing sector. There is also a demand for product testing equipment. In the OE component sector, the relative weakness of the indigenous 2nd and 3rd tiers would seem to present good opportunities for European suppliers. However, it proved difficult to identify real demand – as opposed to polite interest – amongst the interviewed companies. This suggests that a breakthrough into the Mexican market will require a highly targeted, and persistent, sales programme. The Mexican aftermarket serves a very diverse and – comparatively – aged vehicle parc. But it is also very cost conscious, and orientated towards American models. The best opportunities would seem to lie in the supply of diagnostic and testing equipment – e.g. for diesel fuel injection and engine management systems. Finally, Mexico should have a need for design, engineering and training services to take the industry to a higher skills level, with a local capability for vehicle and systems development. However, it proved difficult to find, in either businesses or government, a willingness to invest in such services.

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SPECIFIC BUSINESS OPPORTUNITIES In addition to the generic areas of opportunity identified above, some of the companies interviewed were generous enough to indicate specific products and services that they wished to acquire. These included : Ford Mexico is at the forefront of Ford’s recent policy to switch plants from light truck to small car production. This policy will see more European models being produced on the other side of the Atlantic. There will be – at least in the short term – an increased opportunity for existing European component suppliers to serve these plants. Nissan Mexicana Nissan have identified an number of specific processes where they would like to improve the capabilities of local suppliers. These include painting and chroming of plastics, PVC extrusion, hot stamping, pressure casting and the production of aluminium wheels. Additionally, they are seeking vendors who can supply, on a local basis, fasteners, control cables, and fuel carrying systems. Volkswagen de Mexico In common with other automakers, VW is looking for partners who can improve processes in the local market. Their identified areas for improvement include forging, plastic parts painting, door/window sealing and the manufacture, maintenance and repair of stamping dies and injection moulds. At the tier 2 level, they are seeking to improve the supply of specialist stampings and plastic injection parts. Denso Mexico Various machined and sintered components, including solenoid sprockets and rotors, gearings, end plates, spools, shafts, sleeves and bush stoppers

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Delphi Safety-critical sensors and gauges Nemak Lubricants for cutting processes, and resins

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ACKNOWLEDGMENTS

We gratefully acknowledge the assistance of the following companies and organisations, whose co-operation contributed to the compilation of this report : AMIA – Asociacion Mexicana de la Industria Automotriz A C AMPIP - Mexican Association of Business & Industrial Parks ANPACT – Asociación Nacional de Productores de Autobuses, Camiones y Tractocamiones A C Baker & McKenzie Abogados SC Bancomext Bocar Cifunsa Coopers Confederacion de Asociaciones de Agents Aduanales de la Republica Mexicana Delphi Denso Mexico S A de C V Ficosa International Ford of Mexico GIS – Grupo Industrial Saltillo HSBC INA – Industria Nacional de Autopartes A C Interfil S A Johnson Matthey

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Logistik Free Trade Zone Magna Powertrain Metalsa Nissan Mexicana S A NPL-Ditemsa Promexico Sanluis Rassini Sisamex Secretaria de Economia Mexicana Secretaria de Desarrollo Economico, Gobierno del Estado de Nuevo Leon TIBA Mexico S A UK Trade & Investment

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USEFUL CONTACTS

Asociación Mexicana de la Industria Automotriz (AMIA) Ensenada No 90 Colonia Condesa 06100 Mexico D F www.amia.com.mx Tel +52 55 5272 1144 Email amia@amia.com.mx Asociacion Mexicana de Parques Industriales (AMPIP) Monte Camerún 54-1 Col Lomas Barrilazo 11010 Mexico D F Tel +52 55 2623 2216 Email ampip@ampip.org.mx Asociacion Nacional de Productores de Autobuses Camiones y Tractocamiones (ANPACT) Paseo de las Palmas 1650 Col Lomas de Chapultepec 11000 Mexico D F www.anpact.com.mxTel +52 55 5202 4900 Industria Nacional de Autopartes (INA) Av Col del Valle 607 03100 Mexico D F www.ina.com.mxTel +52 55 5682 5862 Email ina@ina.com.mx ProMexico Trade & Investment Camino a santa teresa 1679 Colonia Jardines del Pedregal Del Alvaro Obregón Mexico DF 01900 www.promexico.gob.mxTel +52 55 5447 7000

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Society of Motor Manufacturers & Traders Ltd Forbes House Halkin Street London SW1X 7DS Tel 020 7235 7000 www.smmt.co.ukEmail international@smmt.co.uk Contact : Pat Shaw UK Trade & Investment The British Consulate Monterrey Av Ricardo Margain No 240 Colonia Valle del Campestre San Pedro Garza Garcia 66220 Monterrey NL Tel +52 81 8356 5359 Email mexicocommercial.mexico@fco.gov.ukContact : Jonathan Clare

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