The Mexican Auto Industry 2008-2010: From the Crisis to a Greater Regiocentric Sway

Submitted by Alex Covarrubias, El Colegio de Sonora on 3 February, 2011 - 13:00

Publication Type:

Conference Paper

Authors:

Alex V Covarrubias

Source:

Gerpisa colloquium, Paris (2011)

Keywords:

financial crisis 2008-2009

Abstract:

The global crisis of 2008-2009 created a dramatic impact on the Mexican auto industry. In 2009 the auto output fell 28.3% as the total production plumped to 1, 566, 842 units from 2,180, 294 in 2008. Though, the recovery of the sector was not only rapid but equally dramatic. At the end of 2010 the industry had practically the same output of 2008 and for the current year the specialized forecasters (among others, PwC & Automotive News) expect Mexican production will beat any previous record. Why and how is this happening? We postulate that Mexican auto production is getting more critical than ever within the North America Region as firms deploy a more regiocentric strategy to both struggle for survival and meet more demanding fuel-efficiency standards. In the midst of the crisis, throughout these years, five out of the seven automakers operating in Mexico poured more than ten billion dollars in retooling old factories, opening new ones, and developing, testing and launching new projects. All of these aimed mostly at increasing the share of the North America market and putting in the marketplace more eco-friendly motorized systems.

Thus, as Ford does it with the CD3 Project from 2005 on, at the present Chrysler, GM, VW and Nissan are launching from Mexico to the world a set of brand-new projects --namely the Premium Fiat 500, the Cactus/Aveo, the New Jetta/the Post-New Beetle, and the Micra-March, respectively. From this perspective, the market and productive strategies of these firms share many common features irrespectively of their nationality. Our essay goes to identify them and discuss their implications for the North American auto sector. We also identify their implications for Mexico in terms of the spatial regionalization that is unfolding as brown-fields worksites become green ones, green-fields worksites become old ones, and ‘brand-new-green-field worksites add to the sector.