By Dudley Althaus
MEXICO CITY--Easier credit, dealer promotions and a sharp
cutback in imports of used cars from the U.S. are causing a rebound
in Mexico's domestic auto sales, which along with strong export
demand, is contributing to record production, industry officials
said Monday.
Sales of cars and light trucks rose 27% in the first half of the
year compared with the same period in 2014, the Mexican Association
of Automotive Distributors reported, accelerating the climb that
began a year ago.
The recovery of the domestic market is tracking the
record-setting growth of Mexico's auto manufacturing industry,
which exports four-fifths of the vehicles produced, mostly to the
U.S. Local assembly plants pumped out a record 1.7 million light
vehicles in the first half of this year, an 8% increase over the
same period in 2014, according to the Mexican Automotive Industry
Association.
While promotions have kept local auto prices in check, the most
important boost has come from the dramatic reduction in imports of
used cars from the U.S., said Guillermo Rosales, executive director
of the distributors association.
Under pressure from dealerships and manufacturers, the
government tightened restrictions on used-car imports, cutting the
number of vehicles brought in across the border by around 70% to
64,000 through May of this year, compared with 228,000 in the first
five months of 2014.
"We see this as the result of a long struggle," Mr. Rosales
said. "We trust the federal government will continue taking the
lead on this."
More than 7.3 million used U.S. vehicles have been imported into
Mexico since regulations were relaxed in 2005. Although Mr. Rosales
says most of those imports have remained in Mexico's northern
border states, he and others have long argued that the imports have
depressed the domestic market for new and used autos.
Compact and sub-compact cars made up more than 60% of the nearly
610,000 new vehicles sold across Mexico through June. About half
the vehicles were bought on credit, mostly with financing offered
by manufacturers or specialized lenders. Mexican banks make
relatively few auto loans, Mr. Rosales said.
Mexico's domestic auto market slumped badly with the 2008
financial crisis, with sales only recovering to pre-crisis levels
of more than one million autos annually in 2013.
The North American Free Trade Agreement remains the main anchor
for the Mexican auto industry, which now accounts for about a
quarter of Mexico's total exports, said AMIA president Eduardo
SolĂs.
Nearly 71% of the 1.4 million vehicles exported between January
and June were shipped to U.S. dealerships, and almost 11% more were
sent to Canada, he said. Germany, the third largest foreign market,
took less than 4% of the vehicles shipped so far this year.
Vehicles assembled in Mexico are gaining U.S. market share, with
nearly one in every eight vehicles sold there manufactured in
Mexico.
Both production and exports are expected to continue increasing
as new plants of foreign auto makers either ramp up or start
production. New plants of Honda Motor Co., Mazda Motor Corp. and
Nissan Motor Co. have come on line since late 2013. Audi AG,
Daimler AG, BMW AG, KIA Motors Corp. and Toyota Motor Corp.
factories are scheduled to start production here in the next few
years. General Motors Co. and Ford Motor Co. have announced
multibillion dollar expansions to assembly and engine plants as
well.
Write to Dudley Althaus at Dudley.Althaus@wsj.com