Mexico auto exports contract as US buyers jump to SUVs

Mexico auto exports contract as US buyers jump to SUVs

Mexico’s automotive industry is reportedly experiencing a rare decline in exports, with shipments down by 16 percent in April.

Car and light-truck exports dropped below 200,000 vehicles last month, shedding more than 35,000 units compared to the same period last year, according to Mexican Automotive Industry Association figures cited by Automotive News.

During the many years of consistent export growth, many automakers tended to shift small-car production into Mexico. Crossovers, trucks and SUVs have since dominated sales growth in the US, stoked by relatively cheap fuel prices in the past few years. Demand for high-riding models has helped drive growth in the US auto market overall, obscuring a mostly negative trend for cars.

Automakers are not expected to fret over the current situation. Many appear to view Mexico as an optimum market for car production. Volatility in car segments has been cited as an important factor in the southward migration. Temporarily idling assembly lines in unionized US factories is likely more expensive than adjusting output in Mexico, and profit margins on cars are typically thinner than that of larger vehicles.

Export numbers provide a narrow view of the Mexican auto market as a whole. Domestic sales are said to have surged by 25 percent in April, surpassing 118,000 units. Several automakers are also building new factories or significantly expanding existing operations. Not all are focused on cars, including Audi‘s new plant that will soon begin building the next-generation Q5 for export to US showrooms.