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Home Automotive

The potential of the automotive industry in the face of nearshoring

Thanks to nearshoring and the USMCA, Mexico has the opportunity to strengthen its automotive industry, but to maximize this potential, collaboration between the government and companies is essential.

T21 Media by T21 Media
14 November, 2024
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The nearshoring phenomenon , driven by Mexico’s proximity to the North American market and the United States-Mexico-Canada Agreement (USMCA) , has opened up new opportunities for the country, especially in key sectors such as automotive, technology and manufacturing.

During the panel Unified Vision: Aligning Government and Supply Chain for Automotive Growth in Mexico at the 10th edition of Automotive Logistics & Supply Chain Mexico , specialists pointed out that in this context, collaboration between the private sector and the government is important , as well as the adoption of new technologies, to make the most of the opportunities that nearshoring offers, while addressing the risks associated with security and efficiency in the supply chain.

Francisco González, CEO of the National Auto Parts Industry (INA) , highlighted the importance of taking advantage of Mexico’s proximity to the North American market, but noted that this is not enough on its own.

“The current context requires us to be efficient, sustainable and strategic. We must be the best option in terms of costs, efficiency and sustainability,” he said.

He added that thanks to the USMCA, Mexico has seen renewed interest from international investors, but turning that interest into action requires long-term stability and certainty.

For her part, Lizzette Gracida, director of External Affairs and Commercial Compliance at Toyota Mexico , emphasized that nearshoring alone is not enough, since the integration of the value chain in the region is crucial.

“Mexico has a historic opportunity, but it still faces challenges such as infrastructure, availability of clean energy and water scarcity. The USMCA promotes this integration, but also demands industrial and sustainability policies that support the development of local suppliers,” said Gracida.

In addition, Victor Salazar, Director of Operations (COO) of Trayecto , stressed the need for adequate and safe transportation infrastructure .

“Improving roads and safe parking spaces is necessary to reduce unproductivity in freight transport,” he said.

He also proposed that both companies and authorities work together to improve security at all levels.

Along these lines, Lizzette Gracida highlighted the importance of working together with the Army and the National Guard to mitigate the negative impacts of the security environment , but stressed that the solution requires a broader national security strategy, with an appropriate profile in the institutions to address this issue in a comprehensive manner and with a long-term vision.

Gracida also expressed confidence that the new administration is moving forward with a national security strategy, and reaffirmed the willingness to collaborate with the authorities to find effective solutions.

Claudia Ávila, an expert in international trade and economic development, expressed her optimism about the Mexican government’s willingness to attract new investments.

“The government is committed to strengthening the current infrastructure at ports and borders, but it is essential to have a systemic vision where all parties collaborate in an open dialogue,” he said.

Ávila stressed that the key lies in cooperation between the private sector and the government to achieve sustainable and competitive economic development in the country.

Ávila also mentioned that technology will play a crucial role in improving security and efficiency at the borders.

“The new Digitalization Secretariat aims to use technology to improve the traceability of goods and road safety,” he said.

Ávila also addressed the need to strengthen the Authorized Economic Operators (AEO) program , which has been neglected in previous administrations.

The future of mobility in Mexico

INA projects that by 2031 Mexico will produce more than 6.8 million electric vehicles , which reaffirms the country’s leadership in the automotive sector.

In this sense, the industry in Mexico is moving towards cleaner and more sustainable production practices , incorporating recyclable materials and advanced technologies to reduce emissions and waste.

To achieve these goals, the government will need to continue strengthening trade agreements and improving technological infrastructure, such as digital connectivity and traceability in the supply chain, which are essential for the accelerated growth of the industry, according to the specialists.

In this regard, Lizzette Gracida also addressed the impact of the T-MEC rules of origin , which have established strict requirements for the production of vehicles in the region.

“The rule of origin is the strictest of any free trade agreement in the world. We have made sure to comply with these rules and will continue to do so,” he said.

However, he warned that concerns from trading partners such as the United States and Canada about unfair competition from certain companies that do not comply with the agreement’s requirements could affect the integration and competitiveness of the automotive industry.

Francisco González highlighted that Mexico is a key supplier of auto parts for the United States, exporting 43% of the auto parts used in the American automotive industry.

He stressed the need to continue adopting new technologies and improving connectivity, particularly in the areas of batteries and software, to remain competitive in the global market.

Comment and follow us on X: @jenna_GH_ / @GrupoT21

Tags: automotive industryAutomotive Logistics MexicoNEARHSORINGUSMCA

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