Auto parts production in the region has increased by 70.3% over the last 13 years, as per data from the National Auto Parts Industry (INA). The US, Canada and Mexico have recorded the highest numbers.
At the end of 2022, the North American region, consisting of US, Canada and Mexico, achieved a record high auto parts manufacturing value of US$412,742 million. This increase was attributed to the rise in the Regional Value Content (VCR) of the parts and components mandated by the T-MEC and the relocation of companies from Asia.
Auto parts production in the North American region, consisting of Mexico, the United States, and Canada, has increased by 70.3% over the past 13 years, according to data from the National Auto Parts Industry (INA). In 2010, a total of US$242,175 million worth of auto parts were manufactured, but by the end of 2022, the region achieved its highest auto parts manufacturing value of US$412,742 million. Mexico’s participation in auto parts production has been outstanding, surpassing that of the US (60%) and Canada (62%) with a growth of 109.3% in the same period. The increase is attributed to the implementation of the Regional Value Content (VCR) of parts and components under the T-MEC trade agreement and the relocation of companies from Asia.
According to the reference data provided by INA since 2010, Mexico has been the primary supplier of auto parts to the United States. However, Mexico stands out from other countries for consistently increasing its penetration in this market, while Canada, China, Japan, and Germany have all lost their share of the market.
Over the past 13 years, the Mexican auto parts industry has increased its share of supply to the US market by 7.8 percentage points, rising from 31.45% to 39.25%. In comparison, South Korea has only gained 1.4 percentage points. Meanwhile, Canada has experienced a 5.9-point decrease in its share, while China and Japan have seen a 1.2 and 5.8-point decline, respectively. Germany has also decreased its share by 1.1 points as a supplier of auto parts to the United States.
As the US auto industry shifts towards electromobility, Mexico has emerged as a critical player in the investments of companies supplying automakers in the United States. Over 21% of the value of a car produced in the US is now Mexican.
For instance, he gave an example that the VCR of the Mustang Mach-E is 80% Mexican, whereas a Tesla car has only 20% Mexican parts in its VCR.
According to the director of INA, China’s position in the North American market has weakened due to the strengthening of Mexico, the US, and Canada, as they strive to create a competitive region. The countries have agreed to increase the Regional Value Content (VCR) as per the terms of the Mexico, United States, Canada Treaty. The VCR indicates the percentage of a product that has been manufactured within the treaty’s region. Under the North American Free Trade Agreement (NAFTA), the VCR required for vehicle manufacturing was 62.5%. However, the T-MEC has increased the content gradually each year, from 66% to 75%. For instance, the director highlighted that the Mustang Mach-E has 80% VCR, which is entirely Mexican, whereas only 20% of Tesla cars have VCR made up of Mexican parts.
Furthermore, there is a requirement that 70% of the steel and aluminum used in car manufacturing must be sourced from North America. This percentage can be achieved through direct purchases made by the automotive terminal industry company, as well as purchases made by suppliers that manufacture the vehicle’s body and chassis using steel and aluminum.