Mexican auto exports surge despite NAFTA fears

Strong 2017 numbers top previous year’s

MEXICO CITY • Mexican auto production and exports hit a record high in 2017, far outpacing growth in 2016, despite fears shipments could be hurt by a renegotiation of the North American Free Trade Agreement (NAFTA) with top trading partners the United States and Canada.

Full-year 2017 auto exports grew 12.1 per cent and production increased 8.9 per cent, auto industry group AMIA said on Monday. Exports rose 16.7 per cent in December from the same month a year earlier, while production was up 1.5 per cent.

“Despite the uncertainty surrounding NAFTA and rumours Mexico wouldn’t be able to continue exporting to the United States, it’s important to note that not only did we hit a record in exports but we also had record export numbers to the United States with nearly 10 per cent growth,” said AMIA President Eduardo Solis.

AMIA has a preliminary production forecast of over 4 million units for 2018, said Solis, a 6 per cent increase in output over last year.

Full-year production came to 3.77 million units in 2017, while exports totalled 3.10 million units, according to AMIA.

With Canada and Mexico objecting to major changes that Washington wants in NAFTA, time is running out to settle differences before the negotiations are scheduled to wrap up at the end of March.

Mexico’s booming auto sector has benefited from NAFTA as major manufacturers, such as General Motors Co, Ford Motor Co, Fiat Chrysler Automobiles and Volkswagen AG, have made the country a top export hub, attracted by cheap labour and free trade pacts with more than 40 nations.

However, car sales in Mexico contracted 4.6 per cent in 2017 from a year earlier and fell 17.6 per cent in December, as stubbornly high inflation squeezed domestic consumption.

Inflation likely ticked up in December to its highest rate in 16-1/2 years due to rising energy and food prices, a Reuters survey of analysts showed on Monday. A worker welds the chassis of a Honda Fit subcompact car on the production line in Celaya, Mexico.