Mexican Automotive Industry Outlook towards 2020 October 6 th, 2016 Mexico City Eduardo J. Solís Sánchez Executive President Mexican Automotive Industry Association
Automotive Sector Economic Relevance: Top generator of foreign reserves. With a foreign trade surplus of 52.5 billion dollars in 2015 Contributes with 3.1% of total GDP and 18.3% of manufacturing industry GDP Mexico has become the 7 th largest manufacturer of vehicles and the 1 st in Latin America 25% of manufacturing exports 4 th largest exporter in the world 5 h largest automotive parts exporter and first supplier for the United States 2
Producción y Exportación Contributed with 3.7% of total world production. More than 80% of total production is directed to foreign markets. 4.0 3.5 3.0 2.5 2.0 1.5 Light vehicle production 3.00 2.50 2.00 1.50 1.00 0.50 Light vehicle exports 1.0 0.5 0.0 0.00 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Jan-Ago 2015 Jan-Ago 2016 3 Millon units 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Jan-Ago 2015 Jan-Ago 2016 Millon units 0.7% -2.7% Source: AMIA.
Automotive Industry GDP From 2008 to 2015, Mexican automotive industry has consolidated as one of the most important in the Mexican economy increasing its share of total GDP by 58% and its share of manufacturing sector GDP by 53% Automotive industry share Total GDP Automotive industry share Manufacturing industry GDP 2.0% 1.5% 2.1% 2.3% 2.5% 2.6% 2.9% 3.1% 12.0% 9.6% 12.8% 14.1% 15.3% 15.9% 17.1% 18.3% 2008 2009 2010 2011 2012 2013 2014 2015P 2008 2009 2010 2011 2012 2013 2014 2015 P the automotive industry impacts 84 economic activities of manufacturing industry and 73 of trade and services. Fuente: INEGI - PIB y Cuentas Nacionales. Precios constantes base 2008. Notas: P se refiere a datos preliminares. Automotriz considera Fabricación de automóviles y camiones, Fabricación de carrocerías y remolques, Fabricación de partes para vehículos automotores, Fabricación de otro equipo de transporte. 4
Manufacturing sector in Mexico Into manufacturing sector, the automotive industry is the second GDP generator. Share manufacturing industry GDP 1993 2000 2005 2014 2015 Percentages 100.0 100.0 100.0 100.0 100.0 Agroindustry 24.1 20.2 22.7 23.6 22.6 Automotive industry 11.2 13.5 12.1 16.9 18.3 Chemistry industry 9.4 11.1 12.6 11.6 9.0 Basic metal industry 3.3 4.5 6.4 5.8 5.4 Beverages and tobacco industries 4.5 4.7 5.5 5.1 5.2 Other industries 47.5 46.0 40.7 37.0 39.6 Source: INEGI Sistema de Cuentas Nacionales. 5
Manufacturing sector employment 2014 Other industries 54.6% Agroindustry 17.3% Automotive industry 14.4% Metal products 7.7% Clothing 5.9% The automotive industry employs 730,923 people directly, representing 14.4% of total manufacturing sector employment. Source: INEGI Censos Económicos 2014. 6
Automotive industry exports importance Millones de dólares 35,000 30,000 25,000 20,000 15,000 10,000 5,000 27,877 15,390 11,879 9,704 Automotive industry exports represent more than oil products exports, remittances income and tourism income together. 0 2013 2014 2015 2016 January - July Automotive industry Oil products Remittances Tourism income Fuente: elaborado por AMIA, con datos de INEGI - Grupo de Trabajo de Estadísticas de Comercio Exterior, integrado por el Banco de México, INEGI, Servicio de Administración Tributaria y la Secretaría de Economía. * Se considera Industria Automotriz: 87.01.20 Tractores de carretera para semirremolques; 87.02 Vehículos automóviles para el transporte => 10 personas; 87.03 Automóviles tipo turismo; 87.04 Vehículos para transporte de mercancías; 87.05 Automóviles para usos especiales; 87.06 Chasises con motor; 87.07 Carrocerías ; 87.08 Partes y accesorios de vehículos; 87.11 Motocicletas 7
Automotive industry exports in the world During 2014 Mexico was the 4 th largest exporter in the world, above counties like Canada and Korea. 8
Production value Vehicles and trucks production 55.4% national production 44.6% 28.8% 26.6% Added value Domestic inputs Imported inputs Source: INEGI. 9
Mexico s production of vehicles by state 10
Railway Sistem Source: Secretaría de Comunicaciones y Transportes. 11
Mexican exports by railway system 2014 value Automotive industry: 22% Source: MIT Observatory of Economic Complexity. 12
Vehicles trade through maritime ports (January-July 2016) Export Import National Ports System 40,115 vehicles 1,257 26,902 246,458 vehicles 186,010 vehicles 5,914 Source: Secretaría de Comunicaciones y Transportes. 53,720 vehicles 101,176 vehicles 27,722 vehicles 13
NAFTA vehicle production Mexico 7% (1.12 million) Canada 15% (2.32 million) 1994 Mexico 20% (3.57 million) Canada 13% (2.28 million) 2015 United State 78% (12.24 million) United State 67% (12.10 million) NAFTA: 15.68 million vehicles. NAFTA: 17.95 million vehicles. From 1994 to 2015 production vehicle of NAFTA región increased 14.5%. Fuente: elaborado por AMIA con datos de Ward s Automotive y OICA. Data in vehicle units. 14
Vehicle production in the world Fuente: elaborado por AMIA con datos de OICA. 15
Light vehicles production and forecast 2020 6.0 5.0 4.4 4.6 5.1 4.0 3.0 2.0 1.9 1.8 1.8 1.5 1.5 1.6 2.0 2.0 2.1 1.5 2.3 2.6 2.9 2.9 3.2 3.4 3.5 4.0 1.0 0.0 2000 2001 2002 2003 2004 2005 2006 Million units 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016^ 2017^ 2018^ 2019^ 2020^ Fuente: 2000 a 2015 registro de AMIA. 2016^ a 2020^ corresponde a estimación de la asociación suponiendo una tasa de crecimiento del 3% y con base en los anuncios publicados. 16
Considering new investments, our forecast is that Mexico will be producing more than 5 million vehicles in 2020 (hard forecast) Mexico 20% (3.57 million) Canada 13% (2.28 million) 2015 Mexico 27% (5.1 million) Canada 13% (2.3 million) 2020 (estimated*) United State 67% (12.10 million) United States 60% (12.1 million) NAFTA: 17.95 million vehicles. * Assuming that United States and Canada maintain the same production level of 2015. 17
Mexico has increased 12.7% its share in NAFTA production during the last 21 years. 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 1994 1995 1996 1997 México México Linear (1994-2015) (México) 1998 1999 2000 2001 2002 2003 2004 2005 2006 ~ Mex México Linear (forecast (~ Mex) 2016-2020) 2007 2008 2009 2010 2011 2012 2013 2014 2015 27.0% 24.0% 21.0% 18.0% With an increase to 5.1 million vehicles in next 5 years, Mexico could increase its share by 6.2%. 2016 2020 * Assuming that United States and Canada maintain the same production level of 2014. 18
and the opportunity in the supply chain 19
Market value and investment opportunity in the supply chain in Mexico PROMEXICO s calculations. Data in billions of dollars. Source: PROMEXICO. The Auto Parts Industry, Business Intelligence Unit. 74% of total demand for processes is imported, therefore, there are huge investment opportunities for foreign companies. The most demanded processes are stamping, foundry, forging, machining, plastic injection and casting. 20
Domestic Market 21
Mexican domestic market 1,600,000 1,139,718 1,135,409 1,351,648 944,907 1,119,106 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Jan-Sep 2015 Jan-Sep 2016 Unidades de vehículos ligeros Source: AMIA, con datos de sus asociados. + 18.4% New vehicle sales keep its growing up trend. September 2016 sales stand as the best this month as well as January-September. 22
Similar countries Light vehicles sales for each 1,000 people GDP per capita (constant US$, 2005) 25.0 Argentina Brazil Chile Mexico 11,000 Argentina Brazil Chile Mexico 20.0 10,000 9,000 15.0 8,000 10.0 7,000 6,000 5.0 5,000 4,000 0.0 3,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014* Source: ACARA, AMIA, ANAC, ANFAVEA. Source: World Bank. * 2014 se estima con publicación del FMI. source: ADEFA, ANAC, ANFAVEA y AMIA. * Light vehicle units. Brazil Mexico Argentina Chile Colombia January - August 2015 1,691,804 833,577 388,804 177,114 185,531 January - August 2016 1,305,562 987,663 462,834 187,219 157,231 change -22.8% 18.5% 19.0% 5.7% -15.3% 23
Imported used vehicles 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 Borderland rest of the country 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Jan-Aug 2015 Source: AMIA with data from SAT - Administración General de Aduanas.. * Claves de documento consideradas: Zona Fronteriza: C1,C2 y VF, Resto del país: A1, A3 y VU. Jan-Aug 2016 Used vehicles imports decreased 60.6% during 2015 and the first eight moths of 2016 it decreased 5.8%. 24
Credit sales 800,000 New vehicle sales Sales of new vehicles through credit * 700,000 600,000 Thousands units 500,000 400,000 300,000 200,000 100,000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 January - June At least 65.8% of January June new vehicles sales were sold through credit. * Nota: considera la mayoría de las instituciones crediticias. Fuente: AMIA y AMDA con datos de JATO Dynamics. 25
Research and development in the automotive industry 26
Automotive Industry Group of Universities and Research Centers 1. Human resources 3. Infrastructure 4. Collaborative projects 5. Government incentives 6. Legislative agenda Source: AMIA. 27
T H A N K Y O U! Eduardo J. Solís Sánchez Executive President Mexican Automotive Industry Association +52 (55) 5272-1144 esolis@amia.com.mx @AmiaMexico Asociación Mexicana de la Industria Automotriz ac 28