Mexico's Automotive Manufacturing Industry Sets Remarkable Investment Record in 2023

Foreign Direct Investment Surpasses Historical Levels, Boosting Exports and Production

Mexico's automotive manufacturing industry has experienced an unprecedented surge in foreign direct investment (FDI) during the first half of 2023, marking a historic milestone for the country.

Data released by the Economy Ministry (SE), as reported by El Economista newspaper, reveals that Mexico attracted over $5 billion in FDI between January and June this year, surpassing not only the prior year's figures but also any previous full-year records. This remarkable influx of capital significantly contributes to Mexico's overall FDI record of $29 billion in 2023.

During this six-month period, Mexico's exports of automotive products witnessed an impressive 14.2% increase, according to data from the Bank of Mexico (Banxico). Car manufacturing also experienced substantial growth, surging by nearly 14%, outpacing the global increase of 8.8% observed during the first nine months of the fiscal year, which concluded on June 30.

Global light vehicle production for the same period ending on June 30 exhibited an 8.8% annual increase, reaching a total of 65.2 million units, largely driven by expanded global production volumes. The previous highest FDI record in this sector was documented in 2019 when it reached $4.3 billion.

In 2022, Mexico's total exports registered a 16.9% surge compared to the previous year, with a significant boost from a 34.2% increase in oil exports and a 15.8% rise in non-oil exports. Notably, automotive product exports played a pivotal role, with sales surging by 9.8% to the United States and an impressive 39.6% to other markets. Overall, Mexico's manufacturing production grew by 5.2% in 2022 compared to 2021.

Despite the remarkable surge in FDI, the U.S. auto parts company Adient anticipates that the operating environment for the automotive industry will remain challenging throughout the remainder of the year. The industry continues to grapple with supply chain disruptions, inflationary pressures, and volatility in commodity prices.

Mexico auto parts and automotive sector, as highlighted by El Economista, stands as one of the most competitive in the world, thanks to its modern infrastructure and a highly competitive workforce.

The year 2023 has seen several significant investments in the automotive industry in Mexico. BMW, for instance, has committed $860 million to expand its plant in San Luis Potosí, while Tesla is investing a staggering $5 billion in the construction of a Gigafactory in Nuevo León.

These remarkable investments signify not only Mexico's attractiveness to global automotive manufacturers but also the resilience and potential of the country's automotive manufacturing industry, paving the way for a promising future of cars made in Mexico.