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Mexico’s automotive industry is the country’s largest manufacturing sector, with the country being estimated to become the fifth-largest vehicle producer in the world by 2025. The industry employs over 1 million people in Mexico and is attractive for its skilled workforce and low costs.
There are more than 50 automobile brands with plants in Mexico and thousands of suppliers who are investing in the Mexican automotive industry. The USMCA’s recent entry into force brings an abundance of opportunities for the industry as it establishes new rules-of-origin which requires that 75% of auto content be made in North America in order to receive duty-free status, an increase from NAFTA's 62.5 percent. Additionally, 40% to 45% of that content being made by workers who earn at least $16 an hour. As a result, automakers are putting provisions in their purchase orders requiring suppliers to comply with the new content rules.
Automakers have adjusted their supply chains to comply with these regulatory changes. In 2020, more than 16 assembly plants have been opened or revitalized in the region, of which 13 are expected to focus on electric vehicles.
Mexico contributes to strengthening the North American auto industry by producing quality outputs at the lowest cost in the region and being able to leverage the country’s free trade agreements with 52 countries (more than 60% of the world’s GDP). Moreover, Mexico presents multiple nearshoring advantages due to the skilled workforce and predictable access to North American, under a solid foundation with the USMCA. Given the ongoing trade wars, global supply chain shocks, and ongoing pandemic, Mexico presents greater certainty for investors - and Nexus is here to help them succeed.
With Nexus, manufacturers comply with international safety and process standards, an IMMEX certification, and skilled workforce. Additionally, companies are able to work with Nexus’s team of experts to make their processes more efficient with the latest software and hardware technologies, as well as energy solutions that reduce utilities costs up to 50%.
With information from the Inter-American Dialogue
