After two years of low growth, the business landscape in Mexico is changing rapidly. The southern neighbor to the U.S. is ready to launch and is the bright spot in Latin American markets, according to John Price, managing director of Market Intelligence LLC.
“Reform-driven investment and delayed capital spending will drive the country’s growth,” Price told Overseas Automotive Council (OAC) members. “The near-shoring boost has made Mexico’s manufacturing sector one of the most cost competitive in the world.”
Price is a recognized thought leader on Latin America markets with more than 20 years of experience in the region, and is a valued source of thought leadership on Latin American markets for the Automotive Aftermarket Suppliers Association (AASA) and the OAC.
In his recent exclusive reports on Mexico and Latin American markets for AASA and OAC members, Price addressed what is changing in Mexico now to make it an even more important market for aftermarket parts manufacturers.
“Mexico’s recently enacted energy reforms include measures that promote investment in gas powered electricity generation in northern Mexico. This promises to dramatically lower electricity costs for Mexico-based manufacturing, further enhancing the sector’s competitiveness,” he noted.
“In spite of short-term challenges to the Mexican economy (cheap oil has weakened the peso), the reform agenda will help to improve Mexico’s economic competitiveness by boosting investment in energy, telecommunications and human capital,” Price explained. “The optimistic trajectory of the U.S. economy will further boost growth in Mexico, whose manufacturing sector is very much tied to U.S. industry. In contrast to Brazil, Chile and Colombia, consumer debt levels in Mexico remain modest so there is room to deepen the reach of car loans into the middle and working classes of Mexico’s 115 million population. Many analysts believe that Mexico is starting what promises to be a five-to-seven year economic growth cycle. Missing out would be a mistake.”
Despite positives in Mexico, other economies in Latin America continue to grapple with internal challenges, Price noted. Brazilian growth is at risk for another one to two years, as its consumers struggle to pay down their debts before spending resumes. In Venezuela, over-valued official rates are depleting its once significant foreign reserves and causing politically damaging shortages of vital goods. Overall in Latin America, Price predicted that business-to-business (B2B) will win over business-to-consumer (B2C) as investment-driven sectors will outpace consumer-driven industries.
Price will be a keynote speaker at the 2015 AASA Vision Conference slated for March 16-17 at the NASCAR Hall of Fame in Charlotte, N.C. For more information about the AASA Vision Conference, visit www.aftermarketsuppliers.org.
The OAC promotes the sale in foreign markets of automotive and heavy-duty products manufactured in North America. Those products include components, accessories, chemicals, hand and power tools, service maintenance and repair equipment, and paint and body supplies for both cars and trucks. OAC has more than 350 members in more than 40 countries. More information is available through its website, www.oac-intl.org. AASA (www.aftermarketsuppliers.org) exclusively serves manufacturers of aftermarket components, tools and equipment, and related products.
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