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Mexican auto parts manufacturers intend to expand their influence in North America

North America / Engineering

the USMCA Agreement requires that automakers used more local resources for their vehicles to qualify for duty free trade in North America.

Mexican auto parts manufacturers intend to expand their influence in North America

Mexican auto parts manufacturers and their customers throughout North America are expecting a record year after the approval of the United States trade transaction USMCA providing for an increase in regional investment.

After several months of debate, U.S. lawmakers on Thursday ratified the Agreement between the US, Mexico and Canada (USMCA), brokered by President Donald trump to replace the North American free trade agreement 1994 (NAFTA).

the Agreement, which is expected to quickly approve the parliaments of the participating countries, requires that automakers used more local resources for their vehicles to qualify for duty free trade in North America.

for several years, automakers have gradually increase the localization of production of automotive components by up to 75% of the value of the car.

Association of manufacturers of autoparts INA pointed to the news that three Chinese automaker might consider moving to Mexico after entering into force of the regulation USMCA.

last year, Mexico's economy was on the brink of recession. Sales, production and exports of automobiles fell, and the industry expects this year they will again fall.

In contrast, the auto parts industry has grown in 2019 2.2%.

INA expects sales of the sector in 2020 for the first time will exceed 100 billion dollars, an increase to 102 billion with almost $ 99 billion.

USMCA aimed at slowing the output of the automotive industry from the United States and Canada, with the localization requirement 40% cars and 45% pickup from areas with "high salary" paying employees at least $ 16 per hour.

in addition, the agreement provides for the priority use of North American steel and aluminum in industrial production of the countries participating.

"Since our suppliers will not be easy to work to comply with the new rules, especially the requirements to steel and aluminum, as well as labor costs," said Miguel Elizalde, head of the Mexican Association of manufacturers of heavy vehicles ANPACT.

However, producers in Mexico are confident that we can expand its influence in 55-60% of the market that was previously closed to them by imports.

"This is very good news," said Smith. "And this gives extra confidence to investors and exporters".

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