Mexico Posts Record Auto Output, Exports as Nafta Talks Loom

By Anthony Harrup Features Dow Jones Newswires

Mexico produced a record number of cars and light trucks in September, backed by greater exports to the U.S., Canada and Europe as a two-year boom in new-car domestic sales began to wane.

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Vehicle production rose 7.7% in September to 307,174 units, compared with the year-earlier month, and was up 9.8% in the first nine months of the year at 2.8 million, the Mexican Auto Industry Association said Monday.

September exports jumped 15% from a year before to almost 271,000 units, bringing the total for the January-September period to almost 2.3 million, an 11.5% gain.

The U.S. is the biggest importer of Mexican-made vehicles, receiving about 76% of exports so far this year, although exports to Canada, Europe and Latin America also have grown.

As the Mexican auto industry posts production and export records, it has become a focal point for the administration of U.S. President Donald Trump which wants to reduce U.S. trade deficits by redrawing rules of the North American Free Trade Agreement.

Eduardo Solís, president of the auto industry association, declined to comment Monday on reports that the U.S. seeks to introduce country-specific rules of origin for the auto sector and require that vehicles have at least 50% U.S. content to qualify for duty-free imports under Nafta. He said no proposals have yet been made.

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But he questioned the 1995-2011 data from the Organization for Economic Cooperation and Development that U.S. Commerce Secretary Wilbur Ross referred to last month in backing the idea of changing rules of origin to address the diminishing share of U.S. content in the vehicles it imports from Mexico and Canada.

"The conclusion from the analysis we did is that the content we have in parts and components from the U.S. is approximately between 37% and 39.5%," Mr. Solís said at a press conference. "These are far from those mentioned by the U.S. Commerce Secretary. I think there's no question of the levels of integration that we have."

For the Mexican auto industry, the most important thing "is that we work with hard data, with current and real numbers," he added.

A fourth round of Nafta negotiations is scheduled to start this week in Washington.

Mexico's domestic new-car sales are declining after growing 19% in both 2015 and 2016. Sales fell 11.5% in September from a year earlier and were off 1.1% in the first nine months of this year at 1.1 million units.

It looks unlikely that sales this year will beat the 1.6 million vehicles sold in 2016, said Guillermo Rosales, head of the Mexican dealership association AMDA. "But it's not a cause for alarm or crisis for the sector," he said.

Write to Anthony Harrup at anthony.harrup@wsj.com

(END) Dow Jones Newswires

October 09, 2017 15:52 ET (19:52 GMT)