Mexican auto exports surge in 2017 despite NAFTA fears

[MEXICO CITY] Mexican auto production and exports hit a record high in 2017, far outpacing growth in 2016, despite fears that 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 rumors 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," AMIA President Eduardo Solis said.

AMIA has a preliminary production forecast of over 4 million units for 2018, said Mr 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 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 labor 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.

Among the top 20-selling brands, Ford suffered the biggest drop in business last year, with sales in Mexico down by almost 18 per cent compared with 2016.

Ford sparked anger last year when it cancelled plans to build a plant in central Mexico. Guillermo Rosales, deputy director general of the Mexican association of automobile distributors, dismissed the notion that this had hurt sales.

REUTERS