Mexico's auto vehicle industry is the country's largest industrial sector.

In 2012 2.6 million autos were produced in Mexico. This makes Mexico the world’s eighth largest auto production country. And the outlook for the country is bright. IHS Automotive forecasts that Mexico will produce 4.2 million autos by 2018. Let’s take a look behind these impressive numbers.

Mexico's auto vehicle industry is the country's largest industrial sector and is closely linked to the fortunes of the US vehicle market as more than 50 percent of its production heads north. Nissan is the largest OEM with presence in Mexico, with a production of 603 000 autos in 2012, closely followed by Volkswagen, GM, Chrysler and Ford. In 2012, these OEMs together made up 95 percent of the autos produced in Mexico.

There has been auto production in Mexico for decades. A well qualified, and still cheap, workforce is one of Mexico’s largest competitive advantages. The twelve free trade agreements with 42 countries and the country’s location between the south and north of the American continent enhance the export opportunities.

In the coming years, Mexico will see several new OEMs establishing new production in the country. These are OEMs like Korean Hyundai, as well as Japanese OEMs. Honda, Mazda and Toyota have all announced plans to boost manufacturing in the region. Volvo and BMW are also considering the opportunity to open new plants in Mexico, while Volkswagen plans to open an Audi production plant to produce its SUV Q5 in Mexico, also possibly exporting the car to Europe.

In 2012 only 475 000 units of Mexico’s 2.6 million produced autos were sold domestically. Mexico has a low level of vehicle ownership and vehicles are generally driven and maintained for as long as possible. This means that the average age of the Mexican vehicle park is among the highest in the world. A large number of used cars are still being imported into the country from the United States. Thus, the trend still persists, but this might change on the back of the Mexican automotive industry’s positive development.

With large investments from several OEMs in new production plants, Mexico will indeed remain one of the most exciting places in the auto industry in the coming years.