Mexico's Auto Production and Exports Having a Record Year

By Anthony Harrup Features Dow Jones Newswires

Mexico's production and exports of light vehicles this year through November have already surpassed the record levels set in 2016 as demand increases from the U.S. and Canada, auto industry officials said Wednesday.

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The production of 332,449 vehicles last month was 4.5% higher than a year ago. For the first 11 months of this year, production was up 9.4% at 3.53 million, above the 3.47 million vehicles turned out in all of 2016. Exports through November were up 12% at 2.85 million units, higher than the 2.55 million in the first 11 months last year. There were 2.77 million vehicles exported in all of 2016.

The record output and exports in 2017 consolidate Mexico's position as the world's fourth-largest exporter and seventh-largest producer of vehicles, said Eduardo Solís, president of the Mexican Auto Industry Association. He said production is expected to reach at least 4 million units in 2018, and exports 3.2 million.

Uninterrupted growth over the past eight years has put Mexico's auto industry at the center of negotiations with the U.S. and Canada to change the North American Free Trade Agreement, or Nafta.

U.S. President Donald Trump is proposing that North American regional content in cars and light trucks imported tariff-free into the U.S. under Nafta be raised to 85% from 62.5%, including 50% U.S. content. That is a proposal that Mexico, Canada and the three countries' automotive industries have said is unworkable.

An informal round of Nafta talks with midlevel negotiators is scheduled to be held in Washington this month, but Mr. Solís said there would be no significant news regarding rules of origin in the auto sector.

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"We are sticking to our position, which is firm and unequivocal," he said. "The only proposal we have on the table, and the one the Mexican government and the Canadian government have, and our [industry] counterparts in Canada and the U.S. have, is to not change the rules of origin."

The U.S. auto industry doesn't even have the capacity to meet the proposal its own government made, he added.

The auto industry is Mexico's second-largest manufacturing sector after food processing, and accounts for about a third of the country's manufactured exports, including auto parts.

The U.S. bought 1% fewer vehicles from Mexico in November, but imported 9.3% more in the first 11 months, remaining by far the biggest market, receiving 75% of Mexican auto exports. Around 14% of cars sold in the U.S. come from Mexico.

Exports to Canada rose 74% in November and 10% in the 11-month period, accounting for 8.9% of the total.

While production and exports continue expanding, the domestic market has hit a soft patch after two years of nearly 20% growth in new-car sales. Domestic sales fell 8.5% in November to 154,616 units and were down 2.8% in the first 11 months at 1.37 million units, of which 59% were imported.

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

(END) Dow Jones Newswires

December 06, 2017 15:45 ET (20:45 GMT)