compared to costs in the United States. Tier 1 and tier2 suppliers that already supply OEMs that are openingor expanding in Mexico will likely be enticed to followthese customers with new investments of their own inorder to secure these new and substantial supplycontracts.Mexico is the 5 th largest auto part producer, so themarket is already competitive. There are 198 auto partplants in the northeast region of Mexico, 70 plants inthe northwest region, 142 plants in the west, and 101plants in the central region. In total, Mexico hasaround 2,559 auto parts companies, with 70 percentbeing foreign owned companies. 26 percent of theforeign owned auto parts companies alreadyestablished in Mexico are from the United States, withJapan accounting for 31 percent, followed by Germanyat 23 percent. Examples of the suppliers alreadyoperating in Mexico include, Bosch, Magna, Hitachi<strong>Automotive</strong> Systems, Delphi, Michelin, Denso, andTWO <strong>Automotive</strong>, among many others.The United States is the leading exporter of parts toMexico, followed by China, Japan, and Germany. Whilethe United States exported over $26 billion in autoparts to Mexico in 2013, it imported almost $42 billionin parts from Mexico. This is more than double ($16.3billion) the imports from the second largest source ofU.S. imports, Canada.Opportunities for U.S. CompaniesOriginal Equipment (OE)There are currently ten passenger vehiclemanufacturers in Mexico, including General Motors,Chrysler, Ford, Nissan, Fiat, Renault, Honda, Toyota,VW, and Mazda. This manufacturing base produces 42brands and 500 models in 21 manufacturing plants andhas a network of 1,700 dealers. In the next two years,BMW and Audi will also open plants in the country.Recently, Nissan and Daimler signed a joint ventureagreement for Nissan to produce Mercedes Benz andInfiniti vehicles in Mexico. The Korean automakerHyundai recently announced its plans to build a plantin Mexico. Kia is also planning to open a $1 billion autoplant that is expected to be completed in 2016 and willhave capacity to build 300,000 vehicles annually.Daimler AG and Renault-Nissan have also announcedplans to spend $1.4 million to build a new factory thatwill produce 300,000 compact Infiniti and Mercedesvehicles a year by 2017. In 2014, Mazda opened a newsmall-car assembly plant in Mexico that is expected toeventually have an annual capacity of 230,000 vehicles.BMW is investing $1 billion constructing a new factorywith a capacity of 15,000 units/year that is scheduledto be on stream by 2019. Toyota plans to increaseproduction capacity by 41 percent in 2015 at itsTacoma plant in Mexico and build a second plant forvehicle production in the near future. For U.S. autoparts makers that already supply to these automakers’operations in the United States, these newinvestments in Mexico could provide exportopportunities going forward.AftermarketMexico has a large number of older cars, providingopportunities for repair and aftermarket parts andaccessories. 57 percent of total vehicles are 10 yearsold or older. The average Mexican consumer owns a17-year-old vehicle. The combination of the age of thevehicles with poor road conditions that put excessivestrain on vehicles provides a prime market foraftermarket parts. In the aftermarket, there arebusiness opportunities for gasoline and diesel engines,transmissions and parts, collision and repair parts,electric parts, maintenance and repairing equipment.The Mexican car fleet is fairly similar to the U.S. carfleet, thereby making aftermarket parts from theUnited States an attractive option. Popular modelsinclude the Chevrolet Aveo, Nissan Versa, and theVolkswagen Jetta. Nissan has almost a 25 percentmarket share, followed by GM, Volkswagen, Ford andChrysler in the top five. Combined, the geographicproximity, similar fleets, and large number of vehiclesreaching prime aftermarket age should provide plentyof opportunities for U.S. companies to exportaftermarket parts to Mexico.2015 ITA <strong>Automotive</strong> <strong>Parts</strong> Top Markets Report 12
ChinaType: Large Market; Small ShareChina is the world’s largest market for automobiles and the world’stop auto producer. China plans to grow its production of new energyautos and parts by 35 percent annually, dedicating more than $18billion in government support to the sector through 2020. Ifachieved, China will very likely become the world’s leading producerof electric and hybrid vehicles and their key components by 2030.OriginalEquipmentRank3AftermarketRank3The Government of China has viewed its automotivesector, including the auto parts industry, as a pillarindustry for many years. The sector is projected to growrapidly under the government’s latest economicdevelopment plans, which devote particular attentionto the latest automotive technologies employed inelectric and hybrid vehicles.Overview of the <strong>Automotive</strong> <strong>Parts</strong> Market in ChinaChina is the third largest market for U.S. auto partsexports. In 2014, there were $2.5 billion in exports withan increase of 13 percent from the previous year. Chinaexported $16 billion in auto parts to the United States in2013, an increase of 9 percent.IHS <strong>Automotive</strong> estimates that light-vehicle sales inChina will increase seven percent in 2015 to reach 25.2million vehicles. SUV’s are a fast-growing segment andthey are expected to comprise 28 percent of themarket. China’s growth in new passenger vehicle salesand the aging of China’s vehicles will inevitably createan increased demand for both original equipment(OE) parts and aftermarket parts.New auto-related regulations and policies in Chinacontinue to be developed as the market grows. Inlate 2014, there were some new announcementsrelated to the distribution of aftermarket parts,requirements for automakers sharing technicalinformation with independent repair shops, andestablishing minimum service requirements forindependent repair shops. This may allow nonoriginalequipment manufacturers to sell to dealersand end users.Challenges and Barriers to U.S. <strong>Automotive</strong> <strong>Parts</strong>Exports to ChinaU.S. automakers and automotive parts manufacturersface significant challenges in China’s automotive marketas China has implemented a series of policies that havehad a discriminatory effect on foreign enterprisesincluding caps on majority foreign ownership. Additionalproblems arose after China’s economic policymakersbegan devoting substantial resources, and creating newpolicies to assist Chinese automobile enterprises indeveloping cutting-edge New Energy Vehicle (NEV)technologies and building domestic brands that couldsucceed in global markets.Chinese policy makers have recently hinted that theymay be developing their own standards. Having a third,fourth, or potentially more set of standards will make iteven harder to export to Chinese markets, and certainlyraise the cost of doing business.Figure 1: 2013 China <strong>Automotive</strong> MarketSales (units) 21,984,079U.S. Auto <strong>Parts</strong> Exports toChina$2,587,345,630Total Chinese Auto <strong>Parts</strong>Imports$40,936,539,654Total Domestic VehicleProduction22,116,825Vehicles in Operation (2012) 52,165,000U.S. Auto <strong>Parts</strong> ExportGrowth 2009-2014+175%2015 ITA <strong>Automotive</strong> <strong>Parts</strong> Top Markets Report 13
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