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Crisis for Mexico's Auto Industry Due to COVID-19

Mexico, an up-and-comer in the automotive production industry, is another country that has been severely impacted by the repercussion of COVID-19.

According to Fausto Cuevas, the director-general of the Mexican Association of the Automotive Industry (AMIA), Mexico’s auto production could fall by 30% this year with exports potentially decreasing by as much as 33%. The country’s automotive production includes both passenger cars and heavy-duty trucks, and both aspects of the industry were heavily impacted when the country shut down all non-essential businesses at the end of March.

While it’s hard to accurately predict what will happen with production and exports as the global pandemic crisis continues, Cuevas notes that the current models anticipate the biggest drop in the country’s history. Adding to the grim predictions from AMIA are models from Mexico’s National Association of Producers of Buses, Trucks, and Tractor-Trailers (ANPACT), which forecast that the country’s heavy-duty truck and bus manufacturing could decrease by 20% by the end of 2020.

Impact on American Businesses

Mexico’s auto crisis could have substantial impact on the American auto industry and logistics. On the logistics side, Freightliner Trucks has two plants in Mexico and Navistar has a large truck assembly operation in Mexico.

Plus, in addition to Mexico’s car and truck production, the country plays a major role in the American auto industry, as nearly 40% of all auto parts that are imported into the United States come from Mexico. This means that American automakers could be heavily impacted by shutdowns and disruptions in Mexico. As the American auto industry works to rebound after COVID shutdowns, a reduction in parts from Mexico threatens to slow production.

Final Thoughts

As Mexico continues to deal with rising numbers of COVID-19 cases and works to rebuild after lockdowns from late March to May, its auto industry is facing unprecedented declines, anticipating historic drops in production. Companies dependent on Mexico’s car, heavy-duty truck, or parts production, should anticipate these slowdowns and consider alternate solutions.

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