Mexico City

August 6-7, 2014

Mexico’s Industrial & Logistics Location Summit

Manufacturing - Logistics - Real State

Automotive Industry

Location Trends

Fausto Cuevas Mesa

General Director

Asociación Mexicana de la

Industria Automotriz, A. C.

Mexican Automotive Industry

• Contributes with 3.5% of

total GDP and 19.8% of

manufacturing industry

GDP.

• Impacts more than 23

industrial sectors.

• Employs13.4% of total

industrial labor (2010).

Automotive GDP in Mexico

Light Vehicles

Assembly Plants in Mexico

Source: AMIA.

New plants announced:

Audi (Puebla)

Nissan-Daimler (Aguascalientes)

BMW (San Luis Potosí)

Research Centers and

Auto Test Tracks in Mexico

Source: Unidad de Inteligencia de Negocios – PROMEXICO.

Investment

• Mexico's automobile and auto parts manufacturers generated 20.8% of total

foreign direct investment (FDI) in 2012.

• Automotive industry new investments during 2006-2012 period added 13.283

billion dollars, an 8.8% share of total FDI received in Mexico during that

period.

Automotive Foreign Direct Investment

(million dollars)

Remunerations

Automotive industry

remunerations are

more than double

of average salaries

paid within the

manufacturing

sector.Automotive and trucks manufacture

Auto parts manufacture

Manufacture industry

0 5000 10000 15000 20000 25000

21582

12162

9354

Pesos per month

Source: INEGI. Censos económicos 2009.

* Las remuneraciones consideran el promedio de todo el personal ocupado incluido en nómina, incluye sueldos salarios y prestaciones.

Production and Exports

• Mexico is ranked as the 8th vehicle manufacturer and the 4th

exporter in the world.

Source: ANFAVEA, AMIA, FOURIN y ADEFA. Source: JAMA, VDA, KAMA, AMIA, ANFAVEA y ADEFA..

Brazil Mexico Thailand Argentina

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

1800000

2000000jan-jun 2013

jan-jun 2014

Japan Germany Korea Mexico Brazil Argentina

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

1800000

2000000

jan-may 2013

jan-may 2014

Production of vehicles and trucks

ImportedNational

Gross value added

33.9% 36.1%

30.0%

Intermediate demand

66.1%

• 66.1% of the

value of all

vehicles

produced in

Mexico is added

within our own

Country.

Source: INEGI. Sistema de Cuentas Nacionales. Matriz de Insumo-Producto. Matriz simétrica a precios básicos, 2008.

* Production Value = Intermediate demand + Gross value added

Production and Exports

• 2013:

– More than 80% of total production goes to foreign markets.

– Contributed with 22.5% of total value of Mexican industry sector exports.

Light vehicle production

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

2,022,2412,102,801

1,507,527

2,260,774

2,557,550

2,884,8692,933,465

1,488,1621,597,594

domestic

foreing

Light vehicle exports

0

500000

1000000

1500000

2000000

2500000

3000000

1,536,7771,613,3131,661,4061,223,3331,859,5172,143,8842,355,5642,423,0841,160,8811,273,571

Source: AMIA, with member’s data.

Production and Exports

• Mexico has become the second major

supplier of light vehicles for US market

• 11.1% of US domestic market is

supplied with Mexican vehicles

(January-June 2014)

• Mexico is second vehicle supplier only

after Canada, (January-June 2014)

Automotive Trade Balance• 2013 Automotive

Trade Balance

surplus was 38.77

billion dollars.

• Automotive exports

value was 1.7 times

crude oil exports and

3.3 times of

remittances.

• Automotive Trade

Balance surplus was

4.5 times higher than

the one resulting from

oil products exports.

Source: BANXICO.

* Automotive includes: 8702 - Vehículos automóviles para el transporte => 10 personas; 8703 - Automóviles tipo turismo; 8704 - Vehículos para

transporte de mercancías; 8706 - Chasises con motor; 8707 - Carrocerías; 8708 - Partes y accesorios de vehículos; y 8711 - Motocicletas.

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

5,333 5,315 82169435.828498.759308.3710553.7510970.4510906.449088.129801.998843.659088.5113330.1914410.9715346.3213202.2723759.7728917.0532244.2938773.69 11,273 13,177

Million dollars

17%

Why do OEM’s decide to

invest in Mexico?...

Elements that make Mexico

attractive for major investments

i. Geographic Location.

ii. Network of free trade agreements with major regions around the

world - Zero tariffs in major markets -

iii. Automotive supply chain strength

iv. Human resources, young and eager to learn

(technicians and engineers).

v. Economic Stability.

…and very important: the Government is a major partner to help

land investments!

… and the opportunity in

the supply of auto parts.

Tier 1 Suppliers

- Illustrative -

Source: AMIA with INA’s data

Supply Capacity

Source: PROMEXICO. The Auto Parts Industry, Business Intelligence Unit.

Supply Capacity

Source: PROMEXICO. The Auto Parts Industry, Business Intelligence Unit.

Market value and investment

opportunity in the supply chain in Mexico

• 71% of total demand for processes is imported, therefore, there are

huge investment opportunities for foreign companies.

• Some of the most demanded processes are stamping, casting,

forging and machining.

The opportunity

described in the top ten

supply processes for the

automotive industry,

which account for 85% of

the opportunity identified

by ProMéxico.

Source: PROMEXICO. The Auto Parts Industry, Business Intelligence Unit.

PROMEXICO’s calculations.

Data in billions of dollars.

Domestic yearly sales

Source: AMIA, with member’s data.

0

200000

400000

600000

800000

1000000

1200000

1400000

Light vehicles

Domestic market: similar countries

Source: ACARA, AMIA, ANFAVEA, ANPACT, World Bank, IBGE, INEGI and INDEC.

Argentina Brasil México

Vehículos por cada mil habitantes

Main Challenge: Domestic Market

Main reasons explaining the gap between sales and market potential:

• Indiscriminate imports of used vehicles from USA

• Low financing levels for vehicles sales

Imported used vehicles

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

776077157515012918451031048272909470483596889458114644209258,983226,372

years

Used vehicles imported *

Δ -12.6%Δ -12.6%

Source: AMIA whit SAT data.

* Consider used vehicle imported on the border, pick ups and general vehicles.

Challenges and opportunities ahead

• Mexican automobile domestic market potential is

2 million vehicles

• Mexico will remain as an important world’s export

base, manufacturing highly competitive vehicles.

• Auto parts industry will keep its place as a major

exporter. However, local supply chain still needs

to be strengthen (tier 2 and tier 3).

¡ T H A N K Y O U !

Fausto Cuevas Mesa

General Director

Asociación Mexicana de la Industria Automotriz, A. C.

(55) 5272-1144

fcuevas@amia.com.mx

Mexico City

August 6-7, 2014

Mexico’s Industrial & Logistics Location Summit

Manufacturing - Logistics - Real State