Mexico Automotive Review 2021

2021

2021

Introduction 2020 was a historic, unprecedented and challenging year for all industries around the world. It was a time for innovation, disruption and digitalization, combined with a strong sense of humanism. The automotive industry, just as other economic sectors, was proactive and creative in adapting to the new reality, reflecting the sector’s strong sense of innovation. After the peak of the pandemic and government emergency lockdowns in April and May, production, sales, exports and imports began to fuel the automotive value chain once again, spurring positive projections for 2021 and the years to come.

OEMs and suppliers of all sizes worked to secure production lines and prevent any possible COVID-19 outbreak. Once US demand for both new vehicles and auto parts began to normalize during the second half of 2020, the industry accelerated production to avoid further disruptions in the supply chain. As 2021 began, production was then affected by a global shortage of semiconductors, along with an extreme cold wave hitting Texas that affected natural gas supply. The supply chain is confident about this being a short-term hurdle and companies are getting ready to ramp up safer, more sustainable and digitalized operations in 2021.

Further down the value chain, homebound salespeople spent much of 2020 working out solutions to grow online sales channels. Online marketplaces became a powerful ally to set the right strategies for online marketing, digital sales and customer satisfaction. In the meantime, dealerships introduced offers that were previously unheard of, while captivating consumers through online advertising. Financing and aftersales services remained at the cornerstone of dealerships and brands’ added value, although companies are ready to take these to the next level.

Mexico’s leadership in vehicle and auto parts production and exports will continue to pave the way for the country’s success in the global automotive industry. Mexico Automotive Review, as the ultimate forum for industry leaders to share their insider’s perspective on global and regional trends, also embraced change. As part of Mexico Business Group, we are now fostering B2B cooperation through our digital platform Mexico Business News, where all our content from previous editions is available. As part of that evolution, we are proud to present the new version of Mexico Automotive Review, now in its first digital edition for 2021.

Table of Contents

Introduction

2

State of the Industry

4

OEMs

26

Supply Chain

46

Sales & Mobility

67

1

State of the Industry Last year brought unprecedented challenges to the automotive sector at the global, regional and national level. Suppliers were forced to embrace a digital world, while sales, production and customer relationships were changed permanently following a global manufacturing shutdown.

Industry leaders have called 2020 “a turning point” for the industry. The light-vehicle sector experienced an annual drop in production, exports and sales against 2019 — falling 20.2, 21 and 28 percent, respectively. The heavy-vehicle segment also posted negative numbers, with drops of 32.3 percent in production, 31.4 percent in exports and 38 percent in sales. Despite all this, the sector remains at the cornerstone of the Mexican economy, representing 3.8 percent of GDP, 20.5 percent of the manufacturing GDP and approximately 1.9 million direct jobs.

The pandemic accelerated industry trends. CASE vehicles are influencing suppliers’ operations across the country. Connected vehicles are enabling new monitoring and safety features.

Autonomous vehicles continue to challenge existing infrastructure. Shared mobility is forcing OEMs to innovate to maintain sales levels. Electric vehicles are also becoming a central element in OEMs’ strategies thus influencing the entire supply chain. In Mexico, automotive clusters in each region are focusing on their individual strengths to become specialized hubs to better attend OEM requirements.

1

State of the Industry

7

Analysis Aftermath of a Historic Year

8

View From the Top José Zozaya | President of AMIA

9

Conference Highlights Auto Parts: Mexico’s True Automotive Engine

10

Expert Contributor Guillermo Prieto | President of AMDA

11

View From the Top Miguel Elizalde | President of ANPACT

12

View From the Top Antonio López | President of ARIDRA

13

View From the Top Miguel Barbeyto | CEO of Mazda de México

15

Analysis Mexican Automotive Industry: SWOT Analysis

16

View From the Top David Adams | President of Global Automakers of Canada

17

Conference Highlights North America Needs a Joint Approach to Handle Common Concerns

18

Roundtable What Needs to Be Done on the Path to Recovery?

20

View From the Top Manuel Montoya | President of CLAUT

22

Conference Highlights Rules of Origin Change Approach to Regional Content

24

Spotlight Unleashing the Potential of a Multibillion-Dollar Market: ARIDRA

25

Content Links

State of the Industry | 7

Aftermath of a Historic Year Industry leaders remain optimistic about the role Mexico will play as a world-class automotive hub. Although auto parts and vehicle production took a hit due to the pandemic and recent semiconductor and natural gas shortages, USMCA is consolidating nearshoring trends in a region where global players from Asia to Europe are setting a strong manufacturing footprint. “Today, we are at a turning point. However, we are pushing to carry on with the commitments we have made so far,” said Fausto Cuevas, Director General of AMIA. Light Vehicles Light-vehicle production remains the cornerstone of the Mexican automotive industry. Over the last 10 years, OEMs ramped up vehicle production mostly to supply the North American market.

Kia, Toyota, Audi, Mazda, BMW, JAC and Stellantis — after the merger of FCA and the PSA Groupe — have arrived with a long line of suppliers behind them. Today, 14 companies report production numbers to INEGI and AMIA. Electrification and Green Vehicles As OEMs work decisively toward achieving carbon neutrality, green vehicles are increasingly becoming part of their portfolio.

Electric, plug-in hybrid and hybrid light vehicles have consistently increased their share in Mexico’s sales, going from 0.5 percent in 2016 to above 2.5 percent in 2020. Despite the pandemic, plug-in hybrids and EV sales have increased year-on-year, uninterruptedly.

As for commercial vehicles, only a few companies produce natural gas, gasoline and electric trucks and buses in the country and 98 percent of these go to the US market. Just two brands are betting on natural gas and hybrid vehicles for the domestic market, which represented 7.6 percent of total commercial vehicle imports in 2020.

Supply Chain Evolution Last year, supply chains were forced to demonstrate resilience and adaptability to avoid disruption, securing inventory and guaranteeing logistics continuity. “2020 was a historic year when everyone was forced to innovate,” said Antonio López, President of ARIDRA. The Mexican automotive sector was dependent on Chinese and Southeast Asian imports for specific components, mainly tooling and plastics. With the fragility of global supply chains exposed, industry leaders agreed the pandemic accelerated a trend toward regionalization. Nearshoring is the buzzword to define relocating production operations closer to where consumer markets are.

The challenge to balance the economic impact and virus outbreaks forced governments to end lockdowns and companies to operate under strict health standards. Companies implemented social distancing measures and consequently accelerated the implementation of smart manufacturing strategies. Meanwhile, at the global level, automakers announced unprecedented commitments toward carbon neutrality that will also drive suppliers to meet more thorough environmental standards. In short, the sector is witnessing the forging of a safer, smarter and more sustainable supply chain. “We were proactive in the most Read the complete article

challenging situation the automotive market has faced in more than 80 years,” said Guillermo Rosales, Director General of AMDA.

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from the

Q: How would you evaluate the state of the automotive industry in the country?

A: It has been a difficult time for the automotive industry in Mexico due to the COVID-19 pandemic. The sector stopped production and new vehicle sales for over two months. The pandemic also translated to a drop in light-vehicle exports and new vehicle sales of 20 percent and 28 percent, respectively.

However, we saw a slight recovery when plants and floor sales opened again in 2H20. At the same time, the increase in demand for semiconductors has affected both production plants and the supply chain due to the role they play in ADAS and other vehicle systems. As part of a perfect storm, the cold wave that hit Texas affected natural gas production and exports. Although brief, the shortage of natural gas forced a technical halt at some facilities in February.

That being said, the relationship between Mexico and North America in the automotive industry is essential. The US still demands Mexican vehicles, particularly SUVs and pickups. Mexico is the world’s fourth-largest vehicle exporter and the sixth-largest vehicle producer. More than 80 percent of our exports go to the US and Canada, while the rest go to Europe, Asia and Latin America. The automotive sector generates more than 1 million direct, well-paid jobs and contributes to 3.8 percent of Mexico’s GDP. We should remain competitive, as a country and as a region,

José Zozaya

making the most of the opportunities brought by this pandemic.

Q: What are your views on recovery expectations after the pandemic?

President of AMIA

A: Considering that the economic impact was caused by a pandemic rather than an economic crisis, we will see a faster recovery. We are optimistic about 2022 and we expect to return to pre-pandemic levels in 2023 or 2024. The automotive sector

We Need to Take Care of Existing Investments

in Mexico has proven to be flexible by adapting quickly at the upstream and downstream level of the value chain. Mexico has vehicle production overcapacity and should demand in the US increase, as we expect it will, the country is ready to supply those vehicles.

Q: What are AMIA’s strategies moving forward?

A: We will further strengthen our collaboration with local and federal authorities and work together for the sector to thrive. We need to send the right signals of where the sector is heading to, while addressing the government’s priorities to create a fertile environment for the sector.

The role of local governments has become more and more relevant to promote investment in their respective states. Potential investors are now reviewing states on a local basis. We are committed and active with local governments so they can better promote both legal certainty and the right investment conditions.

As the new Executive President of AMIA, I am also committed to introducing changes to the association, both internal and external.

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Once all plans are approved by our members, you can expect significant changes in how AMIA engages in relationships and partnerships with the media and the government. AMIA should be a strong representative of the most important sectors of the Mexican economy at this time.

Conference

Highlights State of the Industry | 9

W

hile vehicle manufacturing may be seen as Mexico’s flagship activity, auto part production is what will drive the country’s development as an automotive hub.

During the first day of Mexico Automotive

Summit on Wednesday, Mar. 24, Oscar Albín, Executive President of INA, presented an overview of the sector and the opportunities ahead for the country to reach and surpass auto parts production levels.

“Mexico is already on the vehicle production map but the country still represents less than 5 percent of the global production. Regarding auto parts, 90 percent of our production ends up in North America, which means it is crucial to understand what is happening in the region,” said Albín.

Where Does Mexico Stand in Terms of Auto Parts?

Mexico is the fifth-largest auto parts manufacturer with a production value of US$78 billion in 2020, which surpasses that of light and heavy vehicle production combined, said Albín. But why is the country so important? According to him,

Auto Parts: Mexico’s True Automotive Engine Oscar Albín President of INA

in the Asian region, there are many low-cost manufacturing hubs like the Philippines, Malaysia and Thailand. In Europe, Eastern European countries like Tunisia, Morocco and Turkey offer similar benefits. Auto parts manufacturing in those regions is divided among 10-15 countries. “In North America, however, Mexico is the sole low-cost manufacturing country,” he said.

How Competitive Is Mexico?

According to Albín, before ProMéxico was terminated, this body carried out a research project that determined that an average manufacturing plant with 700 employees in Eastern Europe offered wages of approximately US$6-7/hr in 2019. In China, the average would be around US$5/hr, while in Mexico wages were around US$4/hr. Southeast Asian countries remain the cheapest in this regard.

INA figures show that in Mexico there are 600 Tier 1 companies serving OEMs in Mexico and abroad, along with 900 Tier N companies. Approximately 35 percent of these 1,500 companies are Mexican, while the rest come from the US, Japan, Germany, Canada, France, Korea and other countries. “Very few countries have this great diversity, which has allowed us to learn about different manufacturing techniques,” said Albín.

Regarding supplier distribution, while developed countries form a triangle-shaped supply chain with more suppliers as we go down the supply chain, in Mexico, the industry is rhombusshaped with a lot of opportunities in manufacturing processes, raw materials and tooling. The way to change this, according to Albín is through FDI and by linking Mexican companies with foreign players already established in the country.

Future Expectations In 2019, Mexico produced US$98 billion in auto parts and INA expects to reach US$97 billion in 2021. Further growth will

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be spurred by USMCA’s new rules of origin, said Albín. “In the next seven years, we expect an increase of 10 percent in production value thanks to the agreement.”

M

exico is considered a “megadiverse” country since it forms part of the select group of nations possessing the greatest diversity of animals and plants. Nevertheless, diversity also has an unpleasant side in the differences between

regions in terms of opportunities and development.

In the automotive market, which is influenced by the dynamics of the regional economy and the social factors present in a particular field, this diversity is also evident. There were 10 vehicle buyers in Mexico per 1,000 inhabitants at the end of 2019. There are, however, relevant differences in geographical distribution for this indicator: 12 in the Northern Region, nine in the Border Region, 11 in the Central Region and seven in the Southern Region.

The behavior of the automotive market in the state of Baja California in 2019, which saw a 5.3 percent increase in vehicle

State of the Industry | 10

sales, while the national total fell by 7.5 percent, is another

Mexican Automotive Market’s Regional Differences Guillermo Prieto President of AMDA

example of regional differences and their connection to economic and political factors.

The Tax Incentives Decree for the Northern Border Region, which includes benefits for consumers with a 50 percent reduction in VAT payments (8 percent rate versus 16 percent national rate), was one of the factors that had much to do with this outcome.

I consider it important to take into account the contribution of each region to the automotive market according to their contribution to the Gross Domestic Vehicle Market.

Northern Region (Chihuahua, Coahuila, Durango, Nuevo Leon, Sinaloa, Sonora, Tamaulipas) contributes with 24.0 percent of national GDP, represents 22.9 percent of the country’s lightvehicle buyers and concentrates 22.5 percent of the total lightvehicle dealerships.

The Northern Border and Border Strip Region includes the states of Baja California and Baja California Sur, as well as the border municipalities of Sonora, Coahuila, Chihuahua, Nuevo Leon and Tamaulipas.

The Central Region includes the states of Aguascalientes, Mexico City, Colima, Guanajuato, Hidalgo, Jalisco, Mexico, Michoacan, Nayarit, Queretaro, S.L.P. and Zacatecas, which together account for 49.04 percent of Mexico’s GDP, 53.1 percent of the country’s vehicle buyers and 48.3 percent of all light-vehicle distributors.

The Southern Region includes Campeche, Chiapas, Guerrero, Morelos, Oaxaca, Puebla, Quintana Roo, Tabasco, Tlaxcala, Veracruz and Yucatan. These regions account for 22.4 percent of the country’s GDP, 20.5 percent of vehicle buyers and 25.1 percent of all light-vehicle dealerships.

This description is an illustration of what we can find if we take

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indicators as diverse as access to education, health and per capita income as reference points and place ourselves before the challenge of generating a large national agreement that emphasizes the dilution of inequality between regions due to public and private investment in those less developed places.

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from the

Q: How will USMCA impact heavyvehicle OEMs in the country?

A: Heavy vehicles have a seven-year period to achieve regional value content (RVC) standards. Labor value content (LVC) and steel and aluminum requirements are already in place, as well. However, due to the work of the Ministry of Economy, companies can apply for special regimes so LVC and steel and aluminum requirements can be achieved taking into account the average of an 18-month period.

OEMs need to have a close relationship with their suppliers to meet the percentage of steel and aluminum, as well as LVC while working toward RVC in 2024. At the stage we are in, we consider the local industry successful. That said, it still requires hard work, money, and cooperation.

Q: How is the enforcement of NOM-044 influencing the heavy-vehicle segment?

A: In 2018, Mexico had Euro IV / EPA 04 technologies and NOM-016 ruled that the country was supposed to have ultralow sulfur diesel by the end of 2018. Mexico’s Ministry of Environment and Natural Resources (SEMARNAT) took this as a reference to establish NOM-044 that implied that by mid-2019, only Euro V / EPA 07 vehicle imports or local manufacturing for

Miguel Elizalde

the domestic market would be allowed. However, PEMEX asked for a prorogue to comply with NOM-016 and ultra-low sulfur diesel production.

President of ANPACT

Euro V and EPA 07 vehicles can work with regular diesel if it is close to 50 ppm. The next deadline was set for Dec. 31, 2020, when only Euro VI / EPA 10 vehicles would be allowed to be imported or produced locally for the domestic market. These vehicles only work with ultra-low sulfur diesel. As PEMEX

Accelerating HeavyVehicle Recovery

received authorization to continue distributing regular diesel, the planned process to implement NOM-044 was interrupted.

Q: What are the most relevant impacts of the pandemic on the sector?

A: The pandemic has had an impact on vehicle renovation as we are selling 49 percent below last year’s rate. For an economic recovery, we need to bet on vehicle renewal. This will support the sector horizontally. Economic recovery is fundamental to boost SMEs and create a domino effect that starts with the pillars of mobility and logistics. To assure a faster recovery, we insist on our five points toward vehicle renovation: incentives for new vehicles, financing, professionalization, regulatory reforms, and regulatory compliance.

Likewise, vehicle plating represents a great challenge for the sector. Due to the pandemic, in Mexico City, for instance, to get a plate can take up to three months. This prevents new vehicle sales.

We have had talks with the authorities to propose dealerships taking care of plating and support for online procedures.

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The priorities for ANPACT are to focus on economic recovery and accelerate SCT’s vehicle plating processes. After this, we will take a closer look at financing and incentives for vehicle renewal, which also results in benefits for the environment and society in general.

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from the

Q: What were some of the lessons learned by the aftermarket during the pandemic?

A: It was a truly atypical year. Fortunately, we were considered an essential activity from the very beginning, which supported our faster recovery. That being said, many things changed radically. April, May and June were really difficult since mobility levels remained really low. Many sectors adopted quarantine measures while aftersales services remained suspended.

Meanwhile, e-commerce consolidated what used to be a trend.

Now, online shopping is a common habit, from clothes to auto parts. Online marketplaces remain strong with Mercado Libre as the most important one for the aftermarket, but there are many others. The way in which auto parts are traded is changing as well.

Q: What has been the impact of the pandemic for members of ARIDRA? A: April, May and June were difficult months but there was a fast recovery for sellers and resellers of auto parts. In 2020, the market’s value totaled US$28.5 billion. ARIDRA members report on average they reached 95 percent of the sales seen in 2019.

The forecast for 2021 is that the spare parts market can grow between 10 to 14 percent.

Antonio López

Another interesting figure reported by IHS Markit is that Mexico’s vehicle park reached 33 million units by the end of 2020, including models from 1961 to 2020. The average age of

President of ARIDRA

a vehicle in Mexico is 15.5 years. Many might assume that this indicates that good times are coming for the spare parts market because sales of used vehicle are rising. However, we do rely on new vehicle sales to improve. New vehicle sales grow the vehicle park, which strengthens the aftermarket as a whole. New

Online Sales and Aftermarket Standardization

vehicles enter the aftermarket between four and five years after being bought. In 2021, the aftermarket will receive the units sold during the record year of 2016. In the coming years, the vehicles that were not sold will influence the aftermarket’s performance.

Q: Since the start of your term as president of ARIDRA in 2019, what have been the association’s milestones and what are your expectations for 2021?

A: We remain optimistic for the sector. Several studies point to positive growth for the aftermarket of between 10 and 14 percent in 2021, against the previous year. Changes are also coming in stock management since online sales are forcing companies to get creative in managing sufficient stock to satisfy online demand. On the other hand, it is true that the economic impact of the pandemic has been greater on micro companies. Some of these micro workshops can disappear and there will be some gaps to fill. The market will also be influenced by the fact that such a large player like Napa also decided to leave the market.

Another important element we addressed during this term was the standardization of auto parts sales. These standards apply

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to online auto parts catalogs. There are two major standards in terms of aftermarket sales. One is ACES-PIES for North America, developed by AutoCare, our counterpart in the US. The other is TecDoc, which rules over European spare parts. Companies in the aftermarket should handle both standards.

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from the

Q: How has Mazda adapted to the pandemic?

A: It has been quite an experience because we were all taken by surprise. Many of my colleagues told me that I was exaggerating when on March 13 we sent everyone to work from home to prevent any contagion. At that time, one of the main objectives was to give the employees peace of mind but also safety.

I have always said that companies are made of people and without them, there are no companies. That said, the most challenging thing was to understand what our employees, our distributors, Mazda Corporation and our customers wanted. Achieving a perfect balance between these players was tremendously challenging but also rewarding. We were proactive in implementing actions, strategies and tactics to get around the pandemic. The main focus was always to keep our employees and customers safe while continuing to deliver results. Almost nine months after the pandemic hit, we can proudly say that this strategy has worked.

Beyond that, we all learned a great deal, both professionally and personally. We learned that it is not necessary to go to an office to work. We learned to communicate through technology and to live together as a family while working. Despite all the unfortunate things that this crisis has brought, it has also created good opportunities because we learned to value many things that before we likely did not. Most of all, we realized the importance of people

Miguel Barbeyto

and health.

Q: What drove Mazda’s results during the pandemic?

CEO of Mazda de México

A: Our performance was a result of our people. At Mazda, in addition to being a team, we are a family. Due to great communication between employees, with our headquarters in Japan and with our clients, we had better results than expected.

This may sound like a cliche but it’s true: even if a company has a

Mazda: Pandemic‑Resilient, Forward‑Looking

good product, at a good price with excellent aftersales service, without the team’s enthusiasm to help customers, everything else is worthless.

Mazda has been in Mexico for 15 years and we have never achieved results like we did this year. In October, for example, Mazda exported 206.9 percent more units than in the same period last year. Mazda is a brand that, beyond the features and good performance it offers, has a special charm that has made Mexicans fall in love with our products.

Q: What role are electric and hybrid vehicles playing in Mazda’s lineup in the country?

A: In Mexico, we will soon introduce a mild-hybrid technology in two of our vehicles. The technology helps to decrease pollutant emissions and improves vehicle efficiency. This mild-hybrid system uses a small Integrated Starter Generator (ISG) to capture the energy that is normally wasted during braking and stores it to power the vehicle’s electrical systems, reducing the load on the engine and saving fuel in the process.

Q: What strategies is Mazda implementing to increase regional value content (RVC)?

A: Mazda is working every day to meet these requirements in Mexico and in the North American region. We are building, for

instance, a US manufacturing plant in Alabama. This is a co-investment with Toyota. The aim of this project is to meet these new requirements without harming the customer. If we do not meet these requirements, we have to pay a fee, which then needs to be reflected in the price.

Steel is a very important material for Mazda because of its distinctive design and production. To date, however, there is no steel supplier in the country that can meet our requirements. This is undoubtedly one of the main challenges. Establishing suppliers in the region is not a task that can be accomplished overnight. Research, development, investment and government support are needed.

We want to maintain and increase production in Mexico.

Partnerships like the one we have with Toyota are an extremely valuable part of our medium-term strategy.

One of our objectives through this partnership is to comply with increasingly strict environmental regulations worldwide. Collaboration is necessary and we are sure that it will make us stronger in the future.

Q: What efforts is Mazda making in Mexico to address gender inequality in the company?

A: At Mazda’s Mexico headquarters, 40 percent of the employees are women. Of the seven directors in the management team, three are women. I am a firm believer in the commitment, dedication and ability of women.

At the manufacturing plant, more than 40 percent of the staff working on final assembly is female. We are a company strongly committed to gender equity. We employ people because of their skills and no other reason.

The automotive industry, in general, has been dominated by men for many years. Certain stereotypes, as well as misconceptions, still need to be dispelled for us to see more women taking part in the industry.

Q: What impact does Mazda anticipate from the pandemic in the long term?

A: Recovery will be rather slow. We are forecasting that it will take us until 2024 to reach the industry levels of 2019. There are activities like production and exports that are responding much better. The US market has performed well, although in November, growth slowed down. Because of its production plant in Mexico, this market is a main customer for Mazda, so our efforts are also focused here.

To boost recovery, the economic base would have to be much stronger. There should be more support for entrepreneurs and SMEs. By supporting the latter, consumption is generated and those people are the ones who buy a vehicle.

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State of the Industry | 15

Mexican Automotive Industry: SWOT Analysis The automotive sector has experienced tremendous changes while setting the stage for a new generation of vehicles and industry standards. “The industry will change more in the next five to 10 years than it did in the previous 100 years,” said David Adams, President of Global Automakers Canada, to MBN. After interviewing more than 150 leaders in the sector over the last year, Mexico Business News presents a SWOT analysis of the sector. Strengths and weaknesses refer to internal circumstances, while opportunities and threats deal with external elements influencing the sector directly.

Strengths Production capacity of 5.5 million vehicles. IHS Markit estimates the country’s production capacity between 5.5 million and 6 million units. Mexico hits its light vehicle production peak of 3.9 million units in 2017. At the time, neither Toyota nor BMW had started operations, so Mexican production could easily surpass the 4-million-units production mark by 2024. “One of the biggest achievements of the automotive sector over the last decade is Mexico’s emergence as an important pole for development, which represents a unique opportunity for the country to transform itself into a global platform for advanced manufacturing and innovation,” said Alberto Torrijos, Automotive Sector Leader Partner at Deloitte.

Weaknesses Idle vehicle production capacity. IHS Markit also reports that there is a lack of production capacity for SUVs and pickups. Much of the installed production capacity is focused on compact and subcompact models, when foreign markets are demanding more SUVs and pickups. “Mexico has a problem of idle capacity. Mexico’s installed production capacity is around 5.5 million units. There is a lack of production capacity for SUVs and pickups,” said Guido Vildozo, Main Partner at IHS Markit.

Opportunities USMCA’s rules of origin. Leaders from clusters, associations and major OEMs agree that the enforcement of USMCA’s rules of origin for automotive goods will strengthen the role of vehicle and auto parts manufacturing in North America, a unique opportunity for Mexico. This also means the need for strategies to foster steel and aluminum production in the region. “Without a doubt, USMCA will bring more opportunities for Tier 2s. We will also identify potential suppliers that can increase their production capacity,” said Carmen Hernández, President of Jalisco Automotive Cluster.

Threats Government policies to address the impact of the pandemic on suppliers. Among G20 countries, Mexico has the second-lowest support programs for private companies. Mexico has destined just 0.3 percent of its GDP to support companies and individuals, according to the IMF. This is a threat for a sector that is costsensitive. “Only 7.8 percent of surveyed companies confirmed Read the complete article More about this topic

having received some kind of support, while the rest (92.2 percent) did not receive any help whatsoever,” said Guillermo Prieto, Executive President of AMDA.

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from the

Q: What added value does the association offer to its members?

A: Global Automakers of Canada is a national trade association representing the exclusive Canadian distributors of 15 global automakers. We also work with the Alliance for Automotive Innovation in the US on broader North American initiatives. Our mandate is to help our members with government relations and regulatory compliance issues. We deal with the issues and concerns of our members at a bureaucratic level and also at the political level to understand legislation and other particular issues.

We have 10 committees that address our members’ priorities to share best practices and better deal with concerns on the different aspects influencing the Canadian marketplace.

Q: What was the impact of the pandemic on Canada’s vehicle sales?

A: It was pretty dramatic with 2020 sales ending down 20 percent from 2019. While this sounds bad, it was not as bad as the CEOs were anticipating early in the year when the pandemic first hit.

During the second half of 2020, we saw sales improving every month. That being said, we had a few challenges. Some of our members had challenges arising from the pandemic shut down of logistics operations and production facilities, which caused a shortage of inventory that has not been rectified yet. This probably will not be resolved until the end of 1Q21.

David Adams

Q: How are electric vehicles influencing the Canadian marketplace?

President of Global Automakers of Canada

A: We have a federal government that is very proactive on climate change. By 2025, the goal is for sales of electric vehicles to represent 10 percent of total domestic sales. This target increases to 30 percent by 2030. By 2040, all vehicle sales should focus on full BEVs or PHEVs. At the moment, EV sales in Canada are

The Industry Is Moving Forward

at about 3 percent of total vehicle sales. Growth has not been what was expected considering the available federal government incentives, which can be up to CA$5,000 (US$3,900) for a full EV or around CA$2,500 (US$1,900) for a plug-in hybrid. The province of Quebec, which is the leader in the transition toward EVs, offers around CA$8,000 (US$6,300).

Q: How is USMCA influencing automakers’ operations in Canada?

A: It is more complex for vehicle manufacturers but for the auto parts sector in Canada the new trade agreement has been beneficial to Canadian parts makers. The reality is that the US$16/hour wage provisions were put in place to bring back manufacturing operations to the US from Mexico, however, Canada can benefit from that in recapturing part of that production, as well.

USMCA should be beneficial to the industry but let us make no mistake about it: This is not a free trade agreement; it is a management trade agreement. The reality is that provisions in USMCA will potentially make the automotive industry in North America less dependent on foreign markets. In a way, it

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unnecessarily increases the price of vehicles because instead of manufacturers looking globally for auto parts and components at the lowest possible cost and highest quality, they are forced to look for them regionally to meet the content provisions under USMCA to secure preferential tariff treatment.

Conference

State of the Industry | 17

Highlights

North America Needs a Joint Approach to Handle Common Concerns Guido Vildozo Senior Manager, Americas at IHS Markit

Jose Zozaya President of AMIA

Jean-Francois Champagne President of AIA Canada

David Adams President of Global Automakers Canada

John Bozzella President & CEO of The Alliance of Automotive Innovation

C

armakers in North America must take a joint approach to handle the challenges brought by changing customer preferences, agreed speakers during the panel “Consolidating North America’s Automotive Hub.” During Mexico

Automotive Summit on Wednesday, Mar. 24, representatives from the automotive industries of Mexico, the US and Canada discussed addressed the region’s leading vehicle and auto part manufacturing trends driving the sector.

A year into the COVID-19 pandemic, the automotive industry keeps moving forward in North America, propelled by different factors including USMCA. “NAFTA was a pretty decent trade agreement but it was 25 years old and it did not take new technologies into consideration. USMCA will incentivize the use of new technologies, such as electric transmissions,” said David Adams, President of Global Automakers Canada. Thanks to USMCA and the strong collaborative practices built by its three members, the region’s automotive industry is expected to continue growing, especially after the recent change in the US administration. “With the new US administration, we are seeing a much better alignment of policies and more potential for collaboration,” said Jean-Francois Champagne, President of AIA Canada.

John Bozzella, President and CEO of The Alliance of Automotive Innovation, explained that the Biden administration has four priorities: addressing the COVID-19 pandemic, fixing the US economy, fighting climate change and social justice.

“We are looking at a new administration that takes climate change very seriously,” said Guido Vildozo, Senior Manager, Americas at IHS Markit. The shift in approach toward climate change actually puts the US back in track with international treaties, leading to growing attention in sustainable vehicles.

“USMCA’s rules of origin modernize the industry’s approach to technology. There is now a greater trend towards electrification and more sustainable vehicles. A modernized USMCA should give the industry opportunities,” said Bozzella. The treaty is expected to generate more opportunities for the three countries to embrace newer, more sustainable technologies, but there are still numerous barriers slowing down their introduction. “The need to generate the smallest carbon footprint is one of the factors boosting electric and hybrid

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vehicles in Mexico. But these vehicles represent only 2.6 percent of the total vehicle sales in the country,” said José Zozaya, President of AMIA.

State of the Industry | 18

What Needs to Be Done on the Path to Recovery?

The pandemic hit differently across automotive regions in Mexico. Local governments embarked on diverse strategies to cope with the effects of lockdown measures and federal guidelines. Automotive cluster leaders share their experience in addressing this phenomenon as well as their expectations toward recovery.

We are aware that sales volumes will not be the same as before but we expect them to be enough to cover costs. All provisions have been set for USMCA. Companies should focus on labor environment, labor costs and sourcing raw materials from local markets. Joint efforts with other states will be useful to create new synergies for the sector.

Alejandro Veraza President of the Automotive Cluster of San Luis Potosi

We are in the recovery phase, a training stage in which we need to be prepared for future outbreaks when COVID-19 symptoms can be confused with common influenza. To achieve a solid financial structure, we need comprehensive policies to finance Tier 2 suppliers.

Local governments have made an effort in this regard by providing credit to companies to recover part of their cash flow.

The scenario is favorable for continued growth. The pandemic did not change Queretaro’s assets for incoming companies.

Daniel Hernández Director General of the Queretaro Automotive Cluster

Society has seen how the rules of the game have changed.

Adapting is key. We are experiencing a relatively high level of demand considering what the industry could be experiencing in the near future. We cannot disregard the economic impact of the pandemic. My perspective is that the market will experience low demand levels in the near future at around 75 percent of the levels seen in previous years. This 25 percent decrease in production levels is expected to be reached in March 2021 when stocks and demand stabilize.

Tarsicio Carreon President of the Chihuahua Automotive Cluster

State of the Industry | 19

Before going into the next steps, we first need to evaluate the impact of the pandemic. Up to November, Guanajuato faced job losses of around 50,000 while the country reported close to a million lost jobs. However, the automotive sector in Guanajuato, only lost 1,000 jobs. Companies did not lay off people. On the contrary, some of them are even reporting better financial results than in the previous years. Guanajuato’s strategic location has enabled a faster economic recovery for auto parts companies.

There are other sectors that have not enjoyed a similar recovery

Alfredo Arzola

and will not likely see it until after 2021.

Director General of CLAUGTO

There are many challenges the industry is facing. One of the cluster’s main strategies was to focus on economic aid from the state government to SMEs that were the most affected by the pandemic. Large companies have a corporate network that helps them thrive amid crises.

The final economic impact will depend on the measures that local and national governments take. The state still has room to take advantage of its high-quality production capacity.

Carmen Hernández

Development of suppliers for EVs is a priority for the state government and the cluster is supporting this project.

Director General of the Jalisco Automotive Cluster

For more than 100 years, the automotive industry has invested in R&D and a strong supply chain that can adapt quickly to change. COVID-19 has put employees’ resilience to the test.

The only way to get ahead is to have a solid organizational structure that can respond by implementing measures that adjust to the circumstances in times of crisis. New investments arriving to the state are transferring high value, which means a high technological development characterized by advanced manufacturing, sustainable processes and a high level of social

Elisa Crespo

responsibility.

Executive President and Adviser of the Automotive Cluster of the State of Mexico

It was a year of challenges. The automotive industry’s strong link to foreign markets softened the impact from the pandemic and it has led to positive forecasts for 2021. We expect a remarkable recovery. The auto parts sector continues to grow in the Puebla and Tlaxcala area. We also have opportunities thanks to USMCA, which will serve as a means to increase RVC from Mexico. In addition, there has also been a change in the US government with the new Joe Biden administration.

Monica Doger Director General of CLAUZ

VIEW TOP State of the Industry | 20

from the

Q: How is the automotive supply chain in Nuevo Leon doing a year into the pandemic?

A: Production has been stabilizing. During April and May, plants remained shut down and when we were able to restart operations it was a great challenge to install the hygiene systems, given government guidelines. It was an even greater challenge to align the entire supply chain in the same direction.

OEMs in the US resumed operations in mid-May but in Mexico, we still did not have that authorization. Therefore, they could not start production because auto parts companies here were closed. One-third of the parts used at OEMs in the US are produced in Mexico. It was a long process of negotiations but in early June, almost all companies in the supply line resumed operations.

In the following months, production was largely normalized by the industry’s drive in the US. In September, more cars were produced compared to the same period last year. We also posted good results in October and we expect to close 2020 with results similar to 2019.

Q: How have CLAUT companies experienced the acceleration of automation processes due to the pandemic?

A: The automotive industry was already on the road to

Manuel Montoya

automation long before the pandemic arrived. Over three years ago, Industry 4.0 was gradually incorporated into the state’s plants. The pandemic has only reinforced this strategy, which seeks optimized management of big data and predictive

President of CLAUT

maintenance, among other developments.

Q: How have companies looking to relocate their supply chains to Mexico advanced in their ventures?

Local Consumption Key to Fostering Economic Growth

A: This is a phenomenon that was occurring long before COVID-19 but the pandemic has undoubtedly accelerated it. We are moving from globalization to regionalization. The pandemic exposed the fragility of supply chains scattered around the world. It awakened the need for closer production lines. This has led to a relocation of production to North America but not necessarily to the US. The preference is to join the Mexican market to have costs similar to those in Asia.

In short, cost optimization is important but not as much as it used to be.

Likewise, USMCA and the new rules of origin require an increase in OEM regional value content. Unlike NAFTA, this new treaty also imposes rules for Tier 1 suppliers. This is also pushing companies to relocate their production.

Q: What influence could Joe Biden’s administration have on the automotive industry in Mexico?

A: I do not see any radical changes resulting from this situation. It seems to me that we are going to continue on the path that has already been established. That is what trade agreements are for. Some aspects will perhaps receive more attention, such as sustainability. We will probably see the implementation of more environmental policies that will motivate the North American automotive industry to reduce its carbon footprint.

Electric vehicles (EVs) during Donald Trump’s administration were seen as a faraway scenario.

With Joe Biden leading the way, there will surely be incentives for these technologies to be incorporated.

There is still a long way to go because we still do not have the technology or infrastructure to adopt them on a mass scale but we are going to move in this direction.

Q: How are suppliers in Nuevo Leon preparing to manufacture EV auto parts?

A: Those that need to be prepared the most are companies in the business of engineered components for internal combustion vehicles. Those who have not begun this transition will disappear. One example is Nemak, which entered the electric vehicle business in 2017 and has already begun making battery trays.

Sooner or later, the volume of demand for internal combustion components will start to decrease.

When both electric and internal combustion vehicles have similar costs, we may see greater penetration of this segment in the market. Even today, EVs are more expensive because of the cost of the battery. Not everyone is willing to pay US$10,000 for a battery.

Internal combustion vehicles will remain in the market for many years.

Q: What initiatives has the Mexican Automotive Cluster Network taken during these months?

A: There has been a great deal of collaboration and partnership between all clusters. Each region has its particular needs but we also have common ground across the industry. Since the pandemic began, we have held meetings to share what each of us is up to in our respective states. Initially, when the uncertainty was greatest, surveys were a great support to us.

Through them, we collected information about the plants and production lines that had ceased operations and who was already up and running again. All this information has been very useful to companies.

We have also hosted online seminars regarding USMCA and its implications for the entire cluster network. The challenge in this area has been organizing B2B meetings. The great advantage of these platforms is that buyers now can talk to suppliers from home. However, it has been difficult to coordinate the meetings. This is a great opportunity for Tier 2 companies to grow. This is what is really going to help grow the economy of this country. The auto industry has been driving Mexico’s economy for years but growth will only come when there are more opportunities for local businesses.

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Conference

State of the Industry | 22

Highlights

Rules of Origin Change Approach to Regional Content Manuel Montoya President of the National Clusters Network & CLAUT

Felipe Villareal CEO of Alian Plastics

W

hile they will certainly bring challenges, USMCA’s new rules of origin are also bringing opportunities to Mexico as OEMs and Tier 1s are forced to increase the percentage of regional content, which

could translate into the development of more local suppliers.

However, developing local suppliers can be a taxing process due to the numerous requirements and certifications necessary to produce for the automotive industry.

USMCA means a new chapter for Mexico’s automotive supply chain, agreed speakers at Mexico Automotive Summit on

Ricardo Coto

Wednesday, Mar. 24. “NAFTA did not provide strong incentives

Purchasing Director of Metalsa

to bring suppliers from their native countries, such as Germany

Diego Spannaus Head of Trade and Receivables Finance, Mexico and Latin America at HSBC

to local manufacturers. It promoted imports and led companies or China,” said Manuel Montoya, President of the National Automotive Clusters Network and CLAUT. For that reason, OEMs did not have the need to look for local suppliers. The new rules of origin for automotive goods demand an increase in regional content for core, principal and complementary parts for light and heavy vehicles.

“Rules of origin are changing how we look for regional content,” said Ricardo Coto, Purchasing Director of Metalsa.

But introducing a new supplier to the value chain is not a light decision. “The pandemic, the economic environment, the trade war and USMCA have made us reflect on how we look for businesses,” he added. The complex environment companies are facing is leading them to carefully evaluate not just the quality and capability of a supplier, but also its long-term financial stability.

Small suppliers might need financial support through partnerships or loans to weather crises, agreed speakers.

But getting a loan might not be entirely straightforward as financers are playing close attention to a company’s practices beyond their manufacturing operations. “Social responsibility is becoming increasingly important and companies that do not comply with these norms will have trouble getting financing from any bank,” said Diego Spannaus, Head of Trade and Receivables Finance, Mexico and Latin America at HSBC. Suppliers also have to innovate to remain competitive, especially in an industry where quality and short delivery times are key.

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“The automotive industry is extremely challenging not just in terms of quality and delivery times, but also prices,” said Felipe Villareal, CEO of Alian Plastics, a Tier 2 company.

SPOTLIGHT

State of the Industry | 24

Unleashing the Potential of a Multibillion-Dollar Market: ARIDRA The National Association for Representatives, Importers and Distributors of Spare Parts and Accessories (ARIDRA) is a civil association that has represented independent aftermarket players in Mexico since 1943. Throughout the year, ARIDRA visits business chambers and other organizations in the public and private sectors to bring valuable and time-sensitive information to its members. At the same time, the association supports commercial missions both at the local and international levels to build alliances and find representatives of specific products.

The association allows its members to foster and strengthen business relationships, as it offers competitive alternatives to improve in a highly dynamic market. ARIDRA constantly brings new training opportunities to the table, as well, through projects and topics related to specific aftermarket activities. Its administration has paid particular attention to standardization of auto parts sales through catalogs. ACES-PIES and TecDoc represent the standards for aftermarket sales in Mexico. These were modeled after US and European standards.

The Mexican aftermarket totaled US$28.5 billion in value in 2020. According to ARIDRA, its members reached approximately 95 percent of the sales in 2019. Notably, the aftermarket sector, unlike others in the automotive industry, was labeled as essential from the very beginning of lockdown measures.

With a 33-million-vehicle park with an average age of 15.5 years, there is still room for the aftermarket More about this company More about this topic

to grow through standardization and digitalization.

“Content creation, digital marketing and other areas, are crucial,” said López.

How Chihuahua’s Automotive Sector Emerged From The Pandemic Tarsicio Carreon President Chihuahua Automotive Cluster

Jalisco Making the Best of Tech and Automotive Carmen Hernández Director General of the Jalisco Automotive Cluster

Mexican Labor Reform and USMCA Labor Requirements Luis Monsalvo Panelist, USMCA’s facility-specific rapid response labor mechanism between the US and Mexico

Queretaro: From Manufacturing to Mind-Facturing Daniel Hernández

Director General Queretaro Automotive Cluster

Innovation Is a Game-Changer Now More Than Ever Renato Villaseñor President Queretaro Automotive Cluster

Local Consumption Key to Fostering Economic Growth Manuel Montoya President of CLAUT

Cybersecurity in the Automotive Industry Obed Salinas Commercial Director of Wizlynx group

Joe Biden’s Influence on the Mexican Automotive Industry Analysis | 11/19/2020

Mexico’s Automotive Industry is Ready for the Digital Age Karel van Laack President of the Advisory Board at Holland House Mexico

Deloitte: Let’s Not Forget That Crises Are Opportunities Manuel Nieblas / Alberto Torrijos Manufacturing Industry Leader Partner at Deloitte Mexico/ Automotive Sector Leader Partner at Deloitte Mexico

2

OEMs Mexico is the top vehicle producer in Latin America and sixth in the world. Heavy and light-vehicle OEMs have chosen the country as their manufacturing hub to supply the North American and Latin American region. In fact, 92 percent of total light-vehicle Mexican exports went to the US and Canada in 2020 (85 and 7 percent, respectively). For heavy vehicles, exports aimed at the US represented 95 percent of the total.

In the light-vehicle segment, the most exported models in 2020 were SUVs, accounting for two out of five vehicles exported, and pickups, which represented 25 percent of all exports. Top producers remained unaltered by the pandemic with GM, Nissan, Chrysler, Volkswagen and Kia at the top. Regarding heavy vehicles, trucks account for the majority of production and exports. The Top 5 manufacturers accounted for 98.55 percent of the total production in 2020, including Freightliner, International, Kenworth, Mercedes-Benz Autobuses and Volkswagen Camiones y Autobuses.

Both in the heavy and light-vehicle segments, alternative-power vehicles, including hybrid, electric and natural gas models, are gaining relevance. In the case of light vehicles, Mexico now hosts production of hybrid models from BMW and Ford’s EV Mach-E. In the heavyvehicle segment, DINA and Kenworth are already producing electric heavy-duty trucks for the US market.

2

OEMs

29

Analysis Light Vehicles: Results and Trends

30

View From the Top Claudia Márquez | CEO of Hyundai Motors de México

31

Conference Highlights Toyota Leading Industry Transformation

32

View From the Top Jorge Vallejo | CEO of Mitsubishi Motors de México

33

Expert Contributor Nazareth Black | Brand Director of Zacua

35

View From the Top Guillermo Echeverría | Co-Founder of VUHL

36

Conference Highlights Electrification Advances, Challenges in the Supply Chain

37

View From the Top Raúl Peñafiel | Director General of Jaguar Land Rover Mexico

39

Analysis Commercial Vehicles: Results, Trends

40

View From the Top Claudio de la Peña | Commercial Director of Daimler Mexico

41

View From the Top Alejandro Mondragón | CEO of Scania Mexico

42

Roundtable How are Regulations Impacting Heavy-Vehicle Production?

44

Conference Highlights Incentives, Infrastructure Needed to Advance Heavy Vehicle Trends

45

Content Links

OEMs | 29

Light Vehicles: Results and Trends TABLE 1. LIGHT-VEHICLE PRODUCTION BY SEGMENT

Light-vehicle production remains the cornerstone of the Mexican automotive industry. Over the last 10 years, OEMs ramped up

Production

2020

Segment

Units

SUVs

YoY Variation

Share

1,293,551

42.5%

-18.9%

Pickups

779,148

25.6%

-4.8%

Compacts

702,249

23.1%

-24.1%

Subcompacts

196,254

6.5%

-48.2%

Luxury

68,976

2.3%

-25.6%

3,040,178

100.00%

-20.23%

Total production

vehicle production mostly to supply the North American market.

Kia, Toyota, Audi, Mazda, BMW, JAC and now Stellantis have arrived with a long line of suppliers behind them. Today, 14 companies report production numbers to INEGI and AMIA. Overall, both production and exports were impacted by lockdown measures and supply chain disruptions, dropping 20.2 and 21 percent, respectively. “The global pandemic will have significant negative effects. It will be really difficult for the industry to recover lost production and sales levels. The goal now is to get back on track and look forward to regaining prepandemic levels,” Fausto Cuevas, Director General of AMIA, told MBN in September.

Production Mexico has expanded its production capacity in recent years. The

TABLE 2. LIGHT-VEHICLE PRODUCTION BY BRAND

country hit record production in 2017 with 3.93 million units. In 2020, however, the sector produced 3.04 million units, just above

Production

2020

OEM

Units

Share

YoY Variation

levels seen in 2013. The worst hit occured in 2Q20, when most plants were shut down until mid-May. In April, the sector only produced 3,722 units, a historic low. Industry leaders at KPMG,

GM

728,768

24.0%

-15.7%

Nissan

521,730

17.2%

-22.4%

Chrysler

442,107

14.5%

-20.7%

Volkswagen

298,972

9.8%

-32.6%

Kia

206,800

6.8%

-27.8%

Toyota

169,350

5.6%

-12.1%

Mazda

138,855

4.6%

51.2%

Production in the country is mostly aimed at the foreign market.

Ford Motor

136,067

4.5%

-45.5%

Exports have represented around 88 percent of total production

Honda

128,568

4.2%

-37.1%

Audi

123,955

4.1%

-20.9%

Mercedes-Benz

85,392

2.8%

43.9%

BMW

55,832

1.8%

125.5%

reported positive growth in exports. BMW, whose production

JAC

3,782

0.1%

-20.3%

started in 2Q19, reported a 129 percent year-on-year increase in

Fiat

-

0.0%

-100.0%

3,040,178

100.0%

-20.23%

Grand total

Deloitte and IHS Markit expect a recovery to pre-pandemic levels around 2024 in a normal landscape. Vehicle production has also been influenced by a shortage in semiconductors, which in 1Q21 paused operations at most OEM plants in the country from days to a week. “Mexico has a problem of idle capacity,” said Guido Vildozo, Main Partner at IHS Markit, to MBN. Exports

since 2018. Even in 2Q20, this figure remained the same. North America remains the major export destination, consistently concentrating 92 percent of total light-vehicle exports in 2019 and 2020. Approximately 85 percent of all exports go to the US, while 7 percent go to Canada. Despite the pandemic, some companies

2020, followed by Mercedes-Benz with a 65.7 percent increase and Mazda with 67.6 percent growth. “We are forecasting that it will take us until 2024 to reach the industry levels of 2019,” told Miguel Barbeyto, CEO of Mazda Motor de México to MBN.

Source: INEGI

Electric, Hybrid Vehicles As OEMs announce ambitious plans toward carbon neutrality, electric and hybrid vehicles will play a fundamental role toward sustainable mobility. In Mexico, experts agree more government support is needed to boost sales and grow infrastructure for these vehicles. That being said, numbers show a sustained increase in electric and hybrid models since 2016, when records began. INEGI reports sales of EVs, plug-in hybrids and other hybrid models, with the latter enjoying the largest sales share at around 90 percent in 2020. That being said, sales of EVs and Read the complete article More about this topic

plug-in hybrids have consistently increased, even during the pandemic. EV sales grew 24.3 percent compared to 2019, while plug-in hybrids rose 20.7 percent.

VIEW TOP OEMs | 30

from the

Q: What are some of the lessons Hyundai has learned from the pandemic?

A: It has been really exciting to see teamwork, empathy and understanding regarding the unprecedented situation we are all living. The most important element is everyone’s wellbeing. I’ve worked in the automotive industry for 25 years and it can still be very traditional. The pandemic forced us to take different approaches, which demonstrates not only how flexible we were as a sector but also how we were able to operate with greater efficiency.

Q: What were Hyundai’s strategies to adapt to digital sales processes?

A: We already had our Hyundai Live platform, which allows potential consumers to have direct contact with the brand. This project started in 2019 and allowed us to keep in touch with our customers. In case of vehicle maintenance, we enabled a concierge service so our customers could feel safe when getting their vehicle repaired.

Q: How will quality and service look like in the aftermath of COVID-19?

A: As a sector, we are still in the process of understanding

Claudia Márquez

where we stand. Strategies that could be implemented today might not necessarily work in two weeks. Even with a vaccine, we need to keep up the good practices we have developed so far, not only digitalization but mainly mutual understanding

CEO of Hyundai Motors de México

and empathy.

Q: What is your perspective on the sales cycle the industry is experiencing?

Resilience and Empathy Are Key for Growth

A: This is neither a normal crisis nor the continuation of our 36-month sales decline from the peak reached in 2016. Sales took a huge hit in 2020. It is around 30 percent below what we sold just a few years ago. The industry’s best bet is to acknowledge a slow sales recovery.

By readjusting our volumes, we will adapt to a new reality and plan production and sales accordingly. At the moment, we have between 3.5 and 3.8 percent of the market. Do we want more?

At the moment, no, we do not. The reason is because we have a set product offering focused on the segments where Hyundai is strong. This is why our recovery has been slightly better, because we have a strategic plan for where we want to be. We will make sure to have the right products in the segments where the company wants to participate in, and at competitive prices so our customers remain happy. When you see new Hyundai models coming to the market, then you can be sure we will be growing our market share.

Q: What is Hyundai’s role in advancing the future of mobility and the vehicle of the future?

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A: Hyundai has always been characterized by its innovation and mobility-related projects. We recently launched our sub-brand IONIQ that will be 100 percent electric. This is part of our global effort to strengthen our presence in different segments and Mexico plays a really important role.

Conference

Highlights OEMs | 31

A

kio Toyoda, the current President of Toyota Motor Corporation, says the automotive industry is currently going through a transformation process that we will not experience again in the next 100 years. “To put this in perspective, you have to think

that Henry Ford’s Model T, which reinvented the sector and shaped it as we know it today, is more than 110 years old,” said President of Toyota Motor Mexico Luis Lozano during the opening presentation of Mexico Automotive Summit 2021 on Wednesday, Mar. 24.

“The world is in a permanent transformation. However, the pandemic has accelerated innovation in industrial processes from all sectors, including the automotive industry, where change was already underway,” said Lozano. In all industries, there are three drivers that can accelerate transformation in a significant way, according to Lozano: 1. New consumer needs 2. Business disruption 3. Abrupt public policy changes with the potential to transform a society’s reality

Toyota Leading the Industry’s Transformation Luis Lozano President of Toyota

In the automotive sector, Lozano explained, the change in consumer needs is quite clear. “In many of the most developed markets in the world, young people no longer want to buy cars. I see it even with my children. When I was old enough to drive, any excuse was good to get my parents to lend me the car. Meanwhile, my children are not interested in driving,” he said. “There are changes in consumers that are more profound than what we can estimate now.”

All industries today are threatened by disruption, Lozano added.

But crises have been a driver for change at Toyota. “We have grown stronger and learned from them (crises). The most severe crises we have suffered in recent years, such as the Fukushima earthquake, were crucial because they broke many value and supply chains,” he said. “It made us question the way we operated in Japan.”

Today, Toyota is also going through a profound transformation, said Lozano. “We want to move from being an automotive company to being a mobility company. When people can move anything is possible,” he continued. The company will focus on developing new products and solutions centered around Connected, Autonomous, Shared, Electrified (CASE) technology.

When it comes to electrification, Toyota has high aspirations.

By 2025, the company plans to have an electric version of every vehicle in its lineup. By 2030, it aims to generate most of its revenue from EVs. Meeting these goals and achieving this transformation, Lozano said, is not just Toyota’s job. “There are non-traditional partnerships in the automotive industry that are needed to achieve our CASE goals. We have, for example, partnerships with Uber, Microsoft and even a joint venture with an air taxi company.”

Annually, Toyota produces 10 million vehicles at 53 manufacturing plants worldwide. Fifteen of them are in North America, 10 in the US, three in Canada and two in Mexico. In addition, Lozano

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highlighted that the brand markets the world’s best-selling car: Corolla. “Toyota has the world’s best-selling electrification technology, embedded in the Prius model.”

VIEW TOP OEMs | 32

from the

Q: What are Mitsubishi Motors’ strategies for the Mexican market?

A: Mitsubishi Motors has been in a stabilization stage for a year and a half, since we began operating independently. Detaching from FCA in Mexico implied the need to build a new dealership network, a new logistics infrastructure, suppliers and other aspects. The pandemic then further complicates the landscape. As we ramp up our operations, we are focusing on stabilization, not only in terms of sales but our relationship with dealerships and brand awareness.

Mitsubishi’s lineup is strongly focused on safety and performance.

The clearest example is our recent introduction of the Mitsubishi Mirage G4 2021 in August. This model will allow us to compete in a segment where price and performance is important, since it gives the customer 26km/L. We will offer the fifth generation of our Outlander and we will continue promoting Montero Sport and our PHEV units.

As for the future, we are confident about delivering sustained growth. We have a 1.3 percent market share now. Our target is to reach 1.6 percent market share by 2021 but we do not want to hurry. Rather, we prefer to be consistent with our product, quality, sales and aftersales service.

Q: Who is your target consumer?

Jorge Vallejo

A: We have always been successful in the SUV segment and it remains our priority. We are aware that we are niche brand but in Mexico, Mitsubishi’s legacy is well-known. In some countries, we are No. 1 in market share, while in other markets we excel in

CEO of Mitsubishi Motors de México

sales of accessories, mostly in Asia. We intend to replicate this success in Mexico.

Q: What have been Mitsubishi Motors’ strategies regarding the pandemic?

Thinking Strategically to Sustain Growth

A: We could not wait for the market. We took the initiative and defined a clear strategy early on. The pandemic taught us that decision-making needs to be agile. Amid the pandemic, we created an alternative plan that changed not only the source of our products but also the entry port, cost efficiencies and operators.

All Mitsubishi products to be sold in the country will come from Thailand instead of Japan due to exchange rates that will allow us to be more competitive in the market.

We remain positive and despite the pandemic, we were able to grow 2 percent compared to August 2019. We are also aware of our social commitment to our customers and society. It is not only about selling products but supporting the community you live in, as well.

Q: What role will Mitsubishi Motors play within the Renault-Nissan-Mitsubishi Alliance?

A: Mitsubishi Motors de México is the 11th subsidiary of the Mitsubishi Group. The alliance is directing long-term strategies that will strengthen synergies in different areas across different

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companies. Where companies are strong, the others will learn and vice versa. In Mexico, this was already happening with our financial branches. The benefits of the alliance will be more evident in the coming months and years as we strengthen our capabilities together.

B

eautiful and beloved Mexico, with more than 32 million registered combustion motor vehicles in circulation, emitting millions of tons of pollutants every day that culminate in more than 15,000 new fatalities every year, should not aspire to return

to such a damaging reality on our way to the new normality.

We must aim for a new normality based on a greener, more sustainable reality.

COVID-19 is an enemy virus that has paralyzed the entire world. We voluntarily excluded ourselves through quarantine, without caring that in doing so the economy could collapse and send millions of companies to the business pantheon.

According to figures from the Economic Commission for Latin America (ECLAC), an estimated 2.7 million small and medium-sized companies in Latin America are expected to fail, 500,000 of them in Mexico. Even from self-imposed

OEMs | 33

confinement, we have sent a “see you soon” (which we

New Normality in Mobility or the Enemy at Home?

Nazareth Black

hope is provisional) to our loved ones. All this in order to preserve one’s life. Why then do we voluntarily make invisible the deaths caused by the pollution from the cars we use?

Why do we turn a deaf ear to our direct responsibility for these deaths?

Wonderful quarantine! The rivers, the beaches, the animals taking to the streets, nature reclaiming its space. This makes it clear to us that the enemy is ourselves. The strong and clear message places us at a turning point: it is time to change, it is time to move, but in electric vehicles.

Brand Director of Zacua We owe it to ourselves and we deserve a better quality of life.

We must take advantage of the momentum caused by the unfortunate circumstance of a health emergency and allow Mother Nature all the possible help for her recovery. The time has come to raise awareness and accelerate the adoption of electromobility.

That said, let’s talk about possibilities, truths and realities in Mexico. While there are hundreds and hundreds of possibilities when choosing an internal combustion car, there are less than 15 electric options. This means that we must stop waiting for the electric car with the 3 Bs – bueno, bonito, barato (good, beautiful, cheap) – and adapt to reality by choosing from one of the few options available for the sake, of course, of our own survival.

It is also true that we cannot expect much from the big brands. In my personal opinion, they are simply delaying the arrival of electric vehicles. To support that statement, just remember that the loss of the after-sales business will be in the multimillion dollars. An example: VW, with more than US$70 billion in investment to develop two electric vehicles and now an alliance with Ford with the same objective. Yet, I still have not seen even one of the promised electric cars rolling. Why is that?

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It will then be necessary to turn to Mexican talent focused on achieving national developments. It is here where I identify a great possibility, because Mexico is an important vehicle producer. The most tangible example is Zacua, the first Mexican electric car and a national project that seeks to

project Mexico as a producer of positive technology and a driver of sustainable mobility.

Zacua’s goal is ambitious: to offer zero-emission electric car options, projecting Mexico worldwide as a technology producer and demonstrating that Mexicans are capable of complete car developments.

In this step, Motores Limpios has made an important advance with its Zacua, considered the first Mexican electric car and which caused a stir worldwide. In the first year since its launch, it has received visits from important personalities in the business and governmental spheres, as well as more than 15 ambassadors interested in learning about the project and exploring the possibility of taking it to their countries.

Another interesting achievement in process is the launch of a sister brand focused on utility electric vehicles developed by its engineering area dedicated to the development of custom electric vehicles for AAA companies and governments.

In an ambitious plan, it seeks accelerated growth by supplying these large companies and governments with the electric utility vehicles they require at the best possible cost. For this, there is a comprehensive formula that includes financial support for leasing these vehicles, thus achieving fully taxdeductible projects.

At the Latin American level, the outlook is quite encouraging. There are many companies and professionals in the field that are increasingly organized and sharing information and developing alliances that will result in an accelerated transition.

I must mention that when I refer to electric vehicles, I consider the entire spectrum, from public transport to those focused on micro-mobility.

The big challenge is to increase the existing options by developing new models of electric vehicles, implementing better government incentives and increasing investment in infrastructure for energy charging; of course, we need to make this energy clean and, above all, work to educate people to internalize the urgency of making this transition toward electromobility.

The way forward is not easy using another form of mobility. I usually say that the challenge of sustainable mobility is to row against the current.

However, we have a great opportunity before us: to democratize and improve mobility through access to a variety of electric vehicles that are accessible to all needs.

It is only a matter of time before we can enjoy this panorama with our eyes and, above all, feel it in our lungs.

VIEW TOP OEMs | 35

from the

Q: VUHL is celebrating five years of successfully delivering vehicles. What are the keys behind VUHL’s success as a brand?

A: The company was born as an engineering consultancy firm, meaning that engineering development is in our DNA. Different projects are being carried out constantly to assure optimal levels of innovation while strengthening our presence in the super-sports vehicle niche we play in. We are part of that exclusive and low-volume niche but we do not directly compete with major supercar manufacturers, such as Ferrari, McLaren, or Lamborghini. VUHL manufactures a vehicle at even lower volumes, with particular characteristics that include aerospace-related technology and materials that reduce the vehicle’s weight, optimizing performance. The ethos of our brand is achieving the highest performance through lightweight. When we combine excellent performance with the ultimate driving experience, we have the formula for a unique vehicle.

Q: How would you describe VUHL’s supply chain?

A: Because of our niche, we often find many of our suppliers in the UK, as it has been historically the most advanced country in sports cars. It is a US$4 billion industry, divided among companies that manufacture at low volumes with a high

Guillermo Echeverría

added value. VUHL has strong Mexican suppliers, followed by the UK and then other countries, including France, the US, Germany, and South Africa. We see VUHL as Mexican just as Mercedes-Benz is German. The capital, the ideas, and

Co-Founder of VUHL

the manufacturing are Mexican. However, as with any good project, we have a global supply chain that incorporates the best of the best suppliers.

Q: Customization is important in your

Mexican Supersports Car in a League of Its Own

segment. What is VUHL’s take on this?

A: Customization is part of our essence. Our product requires us to offer different options in performance and aesthetics to create a truly unique car. Our low volume allows us to take customization to the next level. Each vehicle can be painted in any color and any variation, including the interiors. When it comes to performance, we also offer broad options as each customer has a clear idea of how they are planning to use their VUHL. Some want it as a recreational car for the city, which leads us to focus more on aesthetics. Others might be looking for road trips over the weekend, so they will be looking for a balance between aesthetics and performance.

Q: What are VUHL’s strategies toward 2021?

A: We are developing new technologies that will make the vehicle even more fun to drive, improving its performance, and accentuating its uniqueness. VUHL is one of the fastest vehicles in the world, which is one of our core values. We have broken several track records around the world and won top international races. However, being the fastest is just as

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important to us, as it is to deliver a unique product to our customers that they can enjoy and have the best driving experience with. In this regard, we feel proud to know that many of our customers consider that their VUHL is the most fun car within their supersports car collection.

Conference

OEMs | 36

Highlights

Electrification Advances, Challenges in the Supply Chain Nazareth Black CEO of Zacua

Rodrigo Centineo Founding Partner at E•Drive

Elías Massri CEO of Giant Motors

Edgar Estrada Managing Director of Volkswagen Brand Mexico

Ernesto Sánchez Minister of Economic Development of Jalisco State Government

Luis Lozano President of Toyota Motor Mexico

O

EMs have made electric vehicles a priority.

Investments made 10 years ago are becoming a reality across Asian, European and North American brands. For these vehicles to further penetrate the Mexican market, not only charging infrastructure

is very much needed but also the right government incentives to promote sustainable mobility, agreed panelists at Mexico Automotive Summit on Wednesday, Mar. 24. “OEMs in Mexico have played a central role in the development of the public charging infrastructure. Ninety percent of the investment has come from them in the last five years,” said Rodrigo Centineo, Founding Partner at E•Drive, a Mexican company focused on the value chain of electric vehicle charging.

Toyota has been one of the leading players in the electric revolution for the past years. In his participation, Luis Lozano, President of Toyota Motor Mexico, said that the company has a broad approach to electrification. “We do not plan to move from point A to point B without going through other stages. We know that every country, society and customer will have different needs. That is why we will keep our offer open between hybrid, electric, fuel cell or hydrogen,” he said. Following a similar approach, Elias Massri, CEO of Giant Motors, shared that the company has been developing and marketing electric last-mile vehicles for more than five years. “We can already know how many kilometers a truck travels per day, its exact charging times and how long its battery lasts.”

In the public sector, said Ernesto Sánchez, Minister of Economic Development of Jalisco, states follow a different energy path. In Jalisco, for example, there is a state energy plan as part of the five economic development strategies of this administration. It features two areas of support for electric mobility and charging infrastructure: Financing through state development banks for projects related to electric mobility and renewable energies and direct, non-repayable grants for projects related to sustainable initiatives for SMEs. “In Mexico, efforts will always be insufficient if they are isolated.

There must be joint efforts between companies, society and government. The road to electrification is rough and challenging but we are advancing by leaps and bounds, globally,” said Edgar Estrada, Managing Director of Volkswagen Brand Mexico.

Opportunities abound, according to Centineo. Nazareth Black, CEO of Zacua and moderator of the panel, added that the company she

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leads has addressed users’ concerns by offering fully customized service, with a charging center installed at their home, maintenance and financing included.

VIEW TOP OEMs | 37

from the

Q: How has Jaguar Land Rover adapted to the pandemic?

A: This has been a situation that none of us saw coming. The decisions we made before the pandemic’s outbreak and in its first few months helped us to overcome the obstacles we faced.

In November 2019, for example, we decided to develop and start using a platform that would allow our employees to work remotely.

When the pandemic hit, we were ready and decided to have all our staff work from home. The platform has worked extremely well, allowing us to continue offering our services to customers and the dealer network without interruption.

Our commitment to transparency was another factor that helped us deal with the pandemic. When we started as a subsidiary, we wanted to make it possible for customers to view all our vehicles online, including our inventory in Mexico and the variety of configurations available. The objective was to adapt to the clients’ needs if, for example, they required a vehicle in the short term. This program was already available before the pandemic and has enhanced the online purchasing process. We have been able to provide personalized information to customers in less than 30 minutes.

Additionally, just before the crisis, we opened our showrooms in Torreon, Queretaro, Insurgentes, and Parque Lira in Mexico City, and will soon open one in Santa Fe. The goal was to have 20

Raúl Peñafiel

showrooms this year but unfortunately, this plan has been delayed for one or two years. Nevertheless, during the first months of the pandemic, we developed a strategy hand in hand with the dealerships to keep the showrooms open, prioritizing maintenance

Director General of Jaguar Land Rover Mexico

for our customers’ vehicles at home. One of the programs we set up included home-based driving tests.

Q: What changes have you observed in your sales process and consumer behavior?

Luxury Vehicle Segment Still Requires Personal Touch

A: The pandemic has shown that offering a 100 percent digital experience is not enough. When someone buys a luxury vehicle, the contact our dealer network has with that person is still crucial.

It has been a difficult situation for everyone, and we have seen a real change in consumer habits in the country as a result.

People who previously preferred international travel experiences now require a car to discover places closer to home. In this context, a vehicle like the Land Rover Defender, the first off-road vehicle for private use worldwide, is perfect. The Defender has all the capabilities of an all-terrain vehicle but with the total comfort needed for a whole family to travel hundreds of kilometers in it.

Right now, we need to leave our homes and screens and again experience the life we used to live. In the midst of this pandemic, vehicles have become a tool to continue having experiences and discovering the world, even if it is closer than before. This crisis has also made people aware that having a vehicle can help minimize the risk of contagion.

Q: What are the keys to making the customization process at Jaguar Land Rover Mexico an enjoyable experience?

A: Mexico is quite a particular country because it has both profiles: clients who love personalized vehicles and those who just want to own the vehicle as fast as possible. As far as the vehicle is concerned, we have tried to satisfy both needs. For example,

Producción Flexible con Robótica Colaborativa

we provide special vehicles (SV) that the customer can personalize all year round.

The pandemic has also challenged us to continue to offer personalized experiences. We are going to live increasingly in a world that demands greater interaction with artificial intelligence and every minute we spend talking to a human being makes a difference. Technology is vital but at the end of the day, a human being can look you in the eye and empathize with you. The concept of luxury is not associated with a perfect experience, but with having the attention of several people who are looking out for you. We want our clients to perceive that there are people who can make mistakes but who are taking care of them.

Q: How do you expect Jaguar Land Rover’s sales recovery to evolve?

A: Jaguar and Land Rover are both luxury brands. Our customers want greater differentiation rather than status. When the pandemic arrived, there were two options for supply. The first was a push strategy, in which we could put many vehicles on the market and see how we could sell them. However, the decision we made with our headquarters was to expect a pessimistic scenario and make sure that we did not overload the market and dealer networks with more vehicles than

Los cobots en la industria automotriz pueden realizar una amplia gama de tareas como ensamble, pintura, soldadura, pulido, inspección de calidad, entre muchas otras. Todo con un solo robot, de fácil montaje, programación y reubicación, lo que ayuda a tener un ROI acelerado.

necessary. Unfortunately, in September and October, our market share fell sharply because we did not have enough inventory. We had never had such a low level of stock in Mexico. Starting in November, we normalized production at the global level. Our sales are down 40 percent compared to the previous year but we expect to recover to 20 percent below 2019 sales.

Q: What are the company’s goals for 2021 in Mexico?

A: Electric vehicles are at the heart of Jaguar Land Rover’s development. For a relatively small company in terms of volume, we have succeeded in having the first electric vehicle recognized as the car of the year worldwide. This was not by chance. It is the result of an investment that has allowed us to take advantage of the other competitors in the EV segment. In Mexico, this is quite important for us. Even though we know that the market is not yet mature, we have decided to introduce this vehicle here, providing both light maintenance and more complicated repairs, such as changing the battery modules. Today, the sale of hybrid and electric vehicles is significant in the country. We are convinced that electrification is the future, but the market will develop at different speeds in each city. 2021 will be a year full of surprises from Jaguar Land Rover. We will reinforce the electrification of our ranges and there will be a wider range of electric and plug-in hybrid models.

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OEMs | 39

Commercial Vehicles: Results, Trends TABLE 1. HEAVY-VEHICLE PRODUCTION, EXPORTS, SALES AND IMPORTS HEAVY VEHICLE'S RESULTS

Freight and passenger vehicles are at the “core” of the Mexican

250,000

in 2020, however. First, the overwhelming lack of operational

economy, says Miguel Elizalde, Executive President of ANPACT. A variety of trends, both positive and negative, impacted the sector capacity in new plating created a bottleneck that affected sales greatly. The decline in tourism and reduced mobility across cities boosted sales for last-mile delivery vehicles.

0

Production

2018

2019

Exports

sector in 2Q20. Year-on-year, it brought substantial drops in sales, exports, imports and production. Compared to 2020, production dropped 32.5 percent, exports 31.4 percent, imports plummeted 48.9 percent and sales fell almost 38 percent. “We are selling 49

50,875 3,059

81,788 5,989

6,588

50,000

82,269

100,000 Production Exports Sales Imports

As expected, the pandemic dealt a blow to the heavy-vehicle

138,422 115,747

185,718 149,253

150,000

were also debilitating factors. E-commerce, on the other hand,

202,069 168,687

200,000

2020 Sales

Imports

percent below last year’s rate. For an economic recovery, we need to bet on vehicle renewal,” said Elizalde to MBN. Production With 98.55 percent of the production, the Top 5 manufacturers (Freightliner, International, Kenworth, Mercedes-Benz Autobuses and Volkswagen Camiones y Autobuses) remained unaltered. As for which took the worst hit, in first place is Mexican DINA with an 87 percent year-on-year production drop, followed by Hino and Volkswagen with a 53 percent drop.

TABLE 2. HEAVY-VEHICLE PRODUCTION BY BRAND When the lockdowns were first imposed, OEMs had to halt Production

2020

OEM

Rank

production, most of them until mid-May. “It took us two months Units

YoY Variation

Market Share

to be labeled as essential by the federal authorities. From manufacturing to vehicle plating, the entire chain was disrupted,” said Elizalde. The leaders in freight truck production were

Freightliner

1

77,623

-28.2%

56.90%

International

2

42,092

-36.2%

30.85%

Kenworth

3

12,483

-36.8%

9.15%

Camiones y Autobuses.

MercedesBenz Autobuses

4

1,463

-47.5%

1.07%

Exports and Imports

Volkswagen Camiones y Autobuses

5

Isuzu

6

696

-21.6%

0.51%

Volvo Buses

7

688

-29.2%

0.50%

Hino

8

468

-53.1%

0.34%

has been a slight but recognizable improvement since July and

Dina

9

103

-87.0%

0.08%

we have been able to recover the commercialization of all our

Man Truck and Bus México

10

28

-46.2%

0.02%

Gómez, Executive Vice President of DINA.

136,422

-32.49%

100.00%

Grand total

Freightliner, International and Kenworth, while bus production goes to Mercedes-Benz Autobuses, Volvo Buses and Volkswagen

The Top 3 export leaders also remained unchanged in 2020: Freightliner, International and Kenworth concentrate practically all 778

-53.2%

0.57%

the exports with a 99 percent share. The main export destination is, by far, the US, concentrating 95 percent of total heavy-vehicle exports. A highlight in exports comes from Mexican DINA, whose exports increased by 100 percent year-on-year in 2020. ”The pandemic was a completely unexpected situation. However, there

products. Exports have also helped us a great deal,” said Ararggo

Imports show an entirely different side of the market. Here, positions were affected by the pandemic. Scania fell from being the

Source: INEGI

No. 3 importer to No. 5 in 2020, while Freightliner and Volkswagen climbed to the third and fourth places respectively. The Top 5 companies (Hino, Isuzu, Freightliner, Volkswagen Camiones y Autobuses and Scania) concentrate 87 percent of imports in the Read the complete article More about this topic

country. The main country of origin is Japan, concentrating 63.16 percent of imports, followed by India (8.4 percent), Brazil (8.11 percent) and the US (8 percent).

VIEW TOP OEMs | 40

from the

Q: What allows Daimler to keep its position as Mexico’s market leader in the commercial vehicles segment?

A: The first element is technology. Daimler is a leader in technological innovation. The second element is service, which goes hand in hand with technology as we support it through aftersales operations. Third, our added value, which encompasses the strength of our dealership network, our financial branch, as well as our corporate structure. All of this is possible because the customer is right at the center of our strategy. A company cannot thrive if it does not have active feedback from its customers. They are strategic in any decision.

Q: What factors accelerated the decline in the sales cycle for commercial vehicles?

A: The pandemic was a major factor that impacted commercial vehicle sales. Around 33,000 units are sold in a regular year but we will be closing 2020 with around 23,000 units. Recovery will be gradual rather than exponential. The pandemic also influenced imports, exports, different models and changes in distribution channels, such as e-commerce. All of these elements are reflected in commercial vehicles, which are closely related to the economy’s performance. If a country’s economy grows, we see a spillover effect in commercial vehicles.

Claudio de la Peña

Q: How does Daimler technology address customer needs?

A: There are three important elements. First, our own powertrain is present in all our vehicles, which deliver the best operational costs

Commercial Director of Daimler Mexico

in the sector. This is not only about performance. Aftersales value is also key for operational costs, implying reasonable maintenance times. Brand warranties can also drive significant savings.

The second element is connectivity. The pandemic has stressed the

Leading the Market Toward Greater Efficiency

importance of being connected. Connectivity started for us with telematics and finding hard data about the vehicle’s performance.

Today, it is about efficient telematics, meaning how the system can process data and provide meaningful insights for decision-making processes, including predictive maintenance.

The third element in our technological development is safety. We need to take care of the sector’s reputation, including operators and companies. We are launching in 2021 a change in our lanedetection system. If the operator is forced to change lanes, the vehicle can make corrections to avoid an accident. An unfortunate accident can affect the community and the operator, which is why safety is at the core of our technological developments.

Q: NOM-044 brought new environmental standards to the Mexican market. How is it influencing the market?

A: Just as economic factors influence the commercial vehicle market, regulatory affairs also play an important role in Daimler’s development. There are still gray areas in the schedule that NOM044 will follow regarding its implementation. That said, we remain receptive to federal and local government guidelines on the matter.

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Our responsibility is to be prepared technologically for the moment the new regulation is activated. In parallel, by the time NOM-044 was announced, we already had EURO V models in our portfolio.

The full application of the norm will come as ultra-low-sulfur diesel becomes more available. There are also local needs.

VIEW TOP OEMs | 41

from the

Q: What were Scania’s milestones in 2020 and its lessons learned from the pandemic?

A: No one foresaw a pandemic as a threat but this circumstance highlighted strengths and opportunity areas. Most of our business focused on long-distance buses when Scania at the global level is best known for its heavy trucks. In Mexico, we are used to selling more buses than trucks and in 2020, for the first time ever, we sold more trucks than buses due to the pandemic. In 2020, we grew around 40 percent in trucks compared to 2019 in a market that dropped around 40 percent in sales. Companies are starting to realize the added value and benefits that Scania provides.

One important lesson was to evaluate the impact of the pandemic on our bus line. We have three verticals. First, coach, which is by far the most affected segment since practically all units remained stopped. Second, inter-city buses, where we have more volume and although affected, there are signs of a slight recovery. The third and least affected vertical is inner-city buses, where we still do not have a strong presence.

Q: What expertise do you bring to the Mexican commercial vehicle sector as Scania’s new CEO? A: I am introducing best practices for the heavy-truck segment.

There are many opportunities in this regard. I want to make the

Alejandro Mondragón

most of our operations by providing maintenance services at our customers’ facilities. Another relevant element is on-field service, which is different from the service provided at our customers’ patio. We can provide every service at our client’s facilities or we

CEO of Scania Mexico

can work through a subscription service in which technical staff provides assistance regularly. This business model is not mature enough in Mexico for heavy trucks. The vast majority of on-field services in Mexico are reactive rather than preventive. During my time, there will be a radical change in this regard.

Taking Aftersales to a New Level

Q: Scania has increased its market share consistently over the last few years. What are the keys behind this success?

A: Success comes from a very well-defined business strategy and its added value. Mexican customers are starting to realize that Scania offers the best aftersales service. We will continue on that track while being proactive in adding services in the field, at our customers’ facilities and more. I was part of the team that started to revolutionize the way aftersales was delivered in the country.

We will continue to revolutionize the market, taking advantage of artificial intelligence, vehicle connectivity and more technological features that will help us to optimize aftersales.

Q: What are Scania Mexico’s priorities for 2021?

A: First and foremost, we want to continue adding value to our customers through our aftersales service. Our customers must be aware that when they purchase a Scania truck or bus, they are building a relationship with us. We are already leaders in the aftersales service but we want to widen the gap with our competitors. Having a maintenance policy results in greater

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benefits. We are transforming a fixed cost into a variable one.

Customers pay Scania for the number of kilometers they drive.

When our customers experience this, they realize we are taking aftersales to a whole new level. All our business divisions are deeply integrated.

OEMs | 42

How are Regulations Impacting HeavyVehicle Production?

NOM-044 aimed to establish a standard for the exclusive production and import of Euro VI / EPA 10 models in the country by 2021. However, this norm relies on NOM-016, which is focused on the production of ultra-low sulfur diesel – the necessary fuel for these new models. For now, Euro V / EPA 07 vehicles will continue to be allowed until Dec. 31, 2021. The extension is yet to be revised as PEMEX continues to address the issues related to NOM-016.

How are these regulations impacting heavy-vehicle production?

We are proactive in R&D while embracing new and cleaner technologies. Diesel models continue to be best-sellers but in the near future we will see a more electrified mobility. Volvo was among the first companies to embrace electromobility.

In many countries, there are already electric Volvo buses. We are introducing a demo electric bus at the beginning of 2021 for urban corridors in Mexico. As for diesel models, we are introducing Euro VI models, even though NOM-044 still allows for Euro V models to be sold. The public auctions we have won for RTP buses in Mexico City have been with Euro VI models,

Moshe Winer Commercial Director of Volvo Buses

which creates a competitive advantage when it comes to environmental protection. For interurban transportation, we are proud to say that our customers consider our buses the bestperforming in the market in terms of fuel.

The first step to adapt to new technologies was to comply with Euro V requirements. Our natural gas units already complied with those standards before regulations came into force. However, there is still a lack of clarity in the implementation of Euro VI in Mexico. It has been said that there is not enough diesel supply in all corners of the country and that is why Euro VI implementation should be delayed. Likewise, Euro VI implies mammoth costs and the crisis brought by COVID-19 complicates this transition for many companies. We continue working to update all our models and collaborating closely with the different engine suppliers to meet all

Ararggo Gómez Executive Vice President of DINA

requirements. To cope with the effects of the pandemic, we have also made the necessary adjustments to be able to stay as efficient as possible. Exports have helped us a great deal. During these months, we have exported the Hustler model to the US.

Just as economic factors influence the commercial vehicle market, regulatory affairs also play an important role in Daimler’s development. There are still gray areas in the schedule that NOM044 will follow regarding its implementation. That said, we remain receptive to federal and local government guidelines on the matter. Our responsibility is to be prepared technologically for the moment the new regulation is activated. The full application of the norm will come as ultra-low-sulfur diesel becomes more available. There are also local needs. For instance, in the Mexico City metropolitan area, due to environmental regulations, customers have already demanded the newest technologies to

Claudio de la Peña Commercial Director of Daimler Mexico

lower emissions. These signals also come from the market.

Conference

OEMs | 44

Highlights

Incentives, Infrastructure Needed to Advance Heavy Vehicle Trends Miguel Elizalde President of ANPACT

Alejandro Mondragón

L

ower costs, better management and higher sustainability in heavy vehicles are already within grasp, said panelists during Mexico Automotive Summit’s first panel on Wednesday, Mar. 24. However, infrastructure needs to catch up. Further government

incentives and enhanced financing options are also needed to spur growth and help Mexico renew its vehicle fleet.

“Mexico is the fourth exporter and sixth producer of heavy vehicles in the world,” began Elizalde. But the country has taken a hit, just like every other country in the world, as a result of the pandemic. This meant 31.4 percent export cuts during 2020, with another drop in early 2021. “We hope that an economic

CEO of Scania

reactivation in the US improves the situation,” said Elizalde.

Flavio Rivera

noted that “an interesting boost” was indeed already visible in

CEO at Daimler Vehículos Comerciales México

Marcelo Caraveo

Flavio Rivera, CEO at Daimler Vehículos Comerciales México that market.

Risk Director and Asset Manager of TIP

Despite the challenges, Alejandro Mondragón, CEO of Scania

Frank Gundlach

renewed their vehicle fleet. Even though every separate crisis

Director General of Man Truck & Bus Mexico

noted that countries like Mexico had a lot to gain if companies is different, the concept is always similar. “We are in a country where the currency is exposed to fluctuations,” he added.

Especially in Mexico, companies would therefore need to establish a business model that takes the potential of these fluctuations into account. Frank Gundlach, Director General of Man Truck & Bus Mexico, agreed with Mondragon, noting that older vehicles are often inefficient, which generates higher costs, he said. “The concept of total cost of ownership (TCO) is especially important. Maintenance and resale value, as well as fuel consumption, are crucial.”

“In 2020, companies were more careful to preserve their liquidity and fleet renovation was not a priority,” Marcelo Caraveo, Risk Director and Asset Manager of TIP outlined.

Financing options are currently somewhat limited, as well, further preventing renovations. In this regard, support in the form of incentives from the government and a greater effort from all companies involved are needed.

Rivera explained that there are three main pillars for heavy vehicles in the transport industry: sustainability, safety and connectivity, which often overlap. Planning, maintenance and adequate fleet management are crucial to reduce costs. But the

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technology that helps make this happen needs a fundamental basis. “Technology’s foundations lay in infrastructure. We need road, communication and fuel infrastructure, first,” he said.

World’s Largest Automakers Go Carbon Neutral

Keys to Becoming the Best Place to Work in Manufacturing Marcela Barreiro Director of Human Resources Daimler México

BAIC Ready for the EV Revolution Patrick Yang CEO of BAIC México

Lessons Learned From the Pandemic Elisa Crespo Executive President and Adviser of the Automotive Cluster of the State of Mexico

Luxury-Vehicle Segment Still Requires Personal Touch Raúl Peñafiel Director General of Jaguar Land Rover México

Infiniti, Making CASE Vehicles a Reality Philipp Heldt Managing Director Infiniti Mexico

VUHL: Mexican Supersport Car in a League of Its Own Guillermo Echeverría Co-Founder of VUHL

The Scania Way: Taking Care of People First Maite Delgadillo People Experiences and Services Director at Scania México

DINA: A Forward-Looking Mexican OEM Ararggo Gómez Executive VP of DINA

Power Sports Vehicles Demand, a COVID-19 Side Effect Sylvain Blanchette VP of Manufacturing Operations Vehicles for North America at BRP

Pandemic Fast-Tracks Peugeot’s Online Strategy Igor Dumas Managing Director Mexico Groupe PSA

3

Supply Chain The pandemic accelerated smart manufacturing and sustainable operations among auto parts producers, while placing the health of employees as the absolute priority. After production shutdowns, auto parts producers invested heavily in ensuring all the necessary sanitary protocols would be followed. As social distancing measures were enforced, companies quickly realized the advantages of automation. Those that were already at greater degrees of digitalization adapted faster to the change. Among the rest, the interest in eliminating as much manual labor as possible increased and automotive clusters encouraged suppliers to embrace new technologies. At the same time, automakers have announced ambitious plans toward carbon neutrality. Some companies like Toyota and Audi have already published new standards for suppliers’ operations to ensure more sustainable practices across the supply chain.

Overall, auto parts production is expected to grow 24 percent in 2021, compared to 2020. Investments from large Tier 1 and Tier 2 companies took place despite the pandemic, decisions mostly driven by a quick recovery in US vehicle demand. Notably, Chinese and other Asian companies are looking forward to establishing a manufacturing footprint in North America, allowing Mexico to take advantage of this unique opportunity brought by USMCA’s new rules of origin for automotive goods, as well as regionalization trends seen after supply chain disruptions brought by the pandemic.

3

Supply Chain

49

Analysis Supply Chain Transformation Follows Global Disruption

50

View From the Top Ignacio Moreno | CEO of Bocar Group

51

Conference Highlights Opportunities Aplenty Through Smart Manufacturing

52

View From the Top Francisco Maciel | CFO and Country Leader of Faurecia México

53

View From the Top Felipe Villareal | CEO of Alian Plastics

54

View From the Top Martín Toscano | President and General Manager of Evonik Industries de México

55

View From the Top Antonio López | CEO of MLD

57

Analysis New Supply Chain Standards: Safe, Sustainable, Smart

58

View From the Top Jordi Torras | CEO of Zanini Auto Group

59

View From the Top Lourdes Cobos | Operations Manager of Yanfeng Automotive Interiors México

60

Roundtable What Should Companies Do to Embrace Industry 4.0?

61

View From the Top Victor Fuentes | Director General of Mitsubishi Electric Automation for Mexico and Latin America

63

View From the Top Gerardo Varela | General Manager of ZF Services

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Conference Highlights Human Capital Management and Challenges of New Labor Standards

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Content Links

Supply Chain | 49

Supply Chain Transformation Follows Global Disruption FDI IN MOTOR VEHICLE PART MANUFACTURING 20112020 (US$ billions)

and adaptability to avoid disruption, securing inventory and guaranteeing logistics continuity. The Mexican automotive

3.90

4.0 4000

Last year, supply chains were forced to demonstrate resilience

sector was dependent on Chinese and Southeast Asian imports for specific components, mainly tooling and plastics. With

3.52

the fragility of global supply chains exposed, industry leaders

3.4 3400

agreed the pandemic accelerated a trend toward regionalization.

3.12 2.90

“Regionalization will occur at a faster pace in this decade than in

3.11

2.8 2800

the previous one,” said Oscar Silva, Leader Partner Global Strategy Group of KPMG, during MBN’s webinar, “Supply Chain Relocation

2.72 2.2 2200

and Development in North America.”

1.96

Regionalization also implies nearshoring, a buzzword when talking about the automotive supply chain. Nearshoring means companies

1.94

relocating production closer to large consumer markets. Over

1.6 1600 1.50

1.37

1.0 1000

the last year, regionalization and nearshoring trends have created two scenarios for Mexico: large Tier 1 players either expand their

Source: Ministry of Economy

2020 2020

2019 2019

2018 2018

2017 2017

2016 2016

2015 2015

2014 2014

2013 2013

2012 2012

2011 2011

operations in the country or ramp up production, while Tier 2 suppliers are further developed to meet RVC requirements established in USMCA. Tier 1 Expansion Executive President of INA Oscar Albin mentioned in early January 2021 that the sector expects to grow 24 percent compared to 2020, to reach US$96.9 billion in production value, close to the US$97.8 billion reached in 2019. Albrecht Ysenburg, Partner Leader of Automotive Industry of KPMG, told MBN: “We support customers relocating their operations and we have seen a renewed interest from companies to relocate operations from the US or China to Mexico. This is happening as we speak.”

Government data from the Ministry of Economy highlights 2017 as the year with the highest FDI in Motor Vehicle Parts Manufacturing (NAICS Code 3363) with US$3.9 billion invested in the sector. FDI in auto parts manufacturing remained above US$3 billion in 2018 and 2019 but the pandemic dealt a blow and reversed investment to its lowest since 2009, with just US$1.37 billion invested in 2020.

That being said, the sector is undergoing a transformation and to increase RVC, FDI in the sector is expected to rise. “This is a great opportunity to attract more investment to North America because OEMs need to comply with rules of origin requirements, which will reward those suppliers that can manufacture in North America,” said Alejandro Lara, Chairman of American Industries.

Tier 2 Growth Opportunities Only half of the auto parts imported to Mexico come from North America. According to INA, 55.2 percent of auto parts imports in 2020 came from North America (50.2 percent from the US), while 16.2 percent came from China. There is room to grow, either to attract investments or to develop local suppliers. “The country seems to be in a risk-averse environment but the opportunities are there. OEMs and Tier 1s are actively looking for components locally,” says Alberto Torrijos, Automotive Sector Leader Partner at Read the complete article More about this topic

Deloitte Mexico. This also creates many opportunities for foreign players to launch projects in the country as Tier 2 suppliers and for Mexican suppliers to enter the supply chain.

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from the

Q: What values have allowed Bocar Group to remain a market leader for decades?

A: Bocar Group was founded more than 60 years ago by Mr. Federico Baur. Over the years, the company has lived by its core values and principles. People are the company’s main asset and all our employees follow our values as well as our primary concept of discipline, order, and cleanliness. The Baur family continues to play a fundamental role in the company, keeping us on the path of success set by our founder. We have built a successful relationship with our customers and created a diverse customer portfolio based on win-win relationships.

Q: How will USMCA’s new rules of origin influence aluminum processes?

A: Opportunities are similar due to our diversified portfolio. We supply OEMs in the US, as well as European and Asian companies based in the US. Our main market is in North America, so the fact that USMCA has been signed provides us with certainty about the future of our operations and the future economic growth of the region. Risks remain low as long as we comply with the norms established in the agreement.

Q: How did Bocar Group embrace the effects of the pandemic?

Ignacio Moreno

A: In the beginning, the situation was complicated for everyone. In March, the US started to close its borders and at that very moment, we decided that our priority was our employees’ safety and wellbeing. Fortunately, we prepared ourselves by having enough stock

CEO of Bocar Group

available for our customers, which allowed us to maintain supply even though operations remained suspended. We implemented state-of-the-art sanitary protocols to resume operations and we were among the first companies to be cleared by IMSS to go back to work. We handled the crisis effectively. Bocar Group has the

Anticipating Customer Needs to Sustain Growth

capabilities to endure the peak of the crisis, avoiding supply chain disruptions for us and our customers.

Q: How are you participating in the development of CASE vehicles?

A: With the incoming US administration, the trend towards electric and hybrid vehicles will increase considerably. Our strategies are also heading in this direction. Most of our customers have announced billions in investments in electric and autonomous vehicles as a standalone or through a partnership. This has driven us to take part in this trend. We are anticipating their requirements and maintaining close contact with their engineering departments during the early stages of the R&D process. CASE vehicles are a reality and they are coming at a fast rate. We take this seriously, not only at our plant in the US but also at our plants in Mexico.

Q: What opportunities can the Mexican automotive industry take advantage of this year?

A: Engineering and design are great opportunities for the country.

We have capable engineers who can support these efforts but

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we have to educate them to embrace engineering. In this way, we could advance from being a country with solely high-quality manufacturing to being a country that also contributes to product development. Tooling development also remains an important opportunity. We must also capitalize on USMCA.

Conference

Supply Chain | 51

Highlights

Opportunities Aplenty Through Smart Manufacturing Tarsicio Carreon President of Chihuahua Automotive Cluster

Alejandro Preinfalk President & CEO of Siemens

Matt Myrand Director of Advanced Manufacturing and Supply Chain at Faurecia

Manuel Sordo Country Manager at Universal Robots

Marcio Delgado Vice President of Production and Global Manufacturing at ZF

O

n Mar. 24, experienced panelists in the automotive manufacturing environment debated the latest trends in smart manufacturing in a panel moderated by Tarsicio Carreón , President of Chihuahua Automotive Cluster during Mexico

Automotive Summit.

The pandemic and environmental challenges in the US complicated manufacturing heavily in recent times, according to Carreón. Panelists agreed on the many solutions that are already available in the area of smart manufacturing to keep operations safe and cost-effective during the pandemic and beyond. For Matt Myrand, Group Advanced Manufacturing and Supply Chain Manager at Faurecia, adopting these solutions requires testing. “If it works, we move it into our toolbox,” he said. It is also important that solutions can be stacked on top of older solutions. A long-term vision is therefore of the essence, said Myrand.

“Data is the new oil,” said Alejandro Preinfalk, President & CEO of Siemens Mexico. He mentioned that life in general was becoming more connected at an accelerated rate because of the pandemic. For Siemens, digital twins of vehicles are the future.

A digital model of a car, for instance, is useful for R&D, as well as for manufacturing. Afterward, the car can be connected to the cloud for data collection to schedule maintenance. “This creates value for all stakeholders,” he said.

Marcio Delgado , Vice President of Production and Global Manufacturing at ZF, agrees that digital twins and data are increasingly crucial for resource optimization. “Given the importance of optimizing business results, our main contribution is optimizing resources and costs toward product optimization,” he said. ZF needed to rely more on agile tools to achieve this optimization. Other than digital twins, apps helped the company to enhance visibility of manufacturing data. Programmable logic controllers (PLCs) are becoming a common feature, as well.

The only area more important than costs might be employee safety, especially during this new normality. “The new normal has impacted safety at manufacturing facilities. Automation is effective and keeps our employees safe in this environment,” said Manuel Sordo, Country Manager of Universal Robots. Manual labor is still as important as ever but social distancing needed

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to be introduced to global operations in the automotive sector.

“Through collaborative robot automation and virtual reality, you can maintain productivity and the distance,” said Sordo.

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from the

Q: What role does sustainable mobility play in Faurecia’s offering to the automotive industry?

A: We have been working on innovative solutions for fuel savings, air quality and zero emissions, focusing on emerging hydrogen fuel cells and battery packs. As a world leader for the last 15 years in air quality and energy efficiency solutions for passenger vehicles, Faurecia is expanding its experience in passenger vehicles to commercial vehicles and highpower engines.

Sustainable mobility technologies are aimed at significantly reducing emissions for cleaner cities. Through strategic partnerships around the world, Faurecia addresses the megatrends and expectations of consumers in today’s automotive industry, from customization, connectivity and autonomy to sustainable mobility and zero emissions.

Q: What were the key factors behind Faurecia’s new corporate offices in Puebla?

A: We decided to construct the new Faurecia building in Puebla because the state has the right talent and conditions to locate a world-class headquarters. This marks a milestone in Faurecia’s history. Mexico has allowed us to consolidate our operations in one of the most dynamic economic regions for the automotive

Francisco Maciel

sector. This building represents an investment of more than MX$400 million (US$20.5 million) and is a clear sign that the company is still investing in Mexico.

CFO and Country Leader of Faurecia México

Q: What is Faurecia’s strategy to sustain growth?

A: Faurecia cares about being close to its customers and the current market, so it directs its strategies to the needs of the future, anticipating solutions for its customers’ vehicles. For

Local Development for the Car of the Future

several years, Faurecia has been working on the cockpit of the future, facing new challenges to make vehicles more intuitive, connected and personalized.

After the recent acquisition of Clarion Electronics, Faurecia continues to add elements to maintain constant innovation.

Faurecia’s Cockpit Intelligence Platform (CIP) integrates key functions such as driver information, infotainment, safety, comfort, thermal management and sound system to ensure the cockpit interacts intuitively and provides a seamless and predictive on-board experience for all.

Q: How is Faurecia participating in the development of EVs regarding lightweighting and efficiency?

A: For several years, Faurecia has collaborated with the leading brands of electric cars in technological solutions that allow them to embrace electrification and sustainability. A clear example is the manufacture of decorative pieces in wood, which provide an advantage in weight and are totally biodegradable.

Likewise, there are developments based on natural fibers and

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light materials such as aluminum, all aimed at equipping electric vehicles with quality interiors adapted to the new sustainability trend. It is important to mention that these developments and their manufacturing processes are being carried out at our development and manufacturing centers in Puebla.

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from the

Q: How has the pandemic influenced Alian Plastics’ operations?

A: It created a revolution for everyone. We needed to adapt our strategies prioritizing health and safety, while focusing on our staff and sales. In March, most of our automotive customers started to suspend operations. Fortunately, we started a diversification process toward other industries in 2018. Our projects required years to be developed and by starting in that year, we were able to complete our diversification successfully in February, gaining participation in the HVAC niche. Amid the shutdowns mandated by the government, the HVAC industry remained an essential sector, which helped to keep our operations running.

At that moment, we were worried about how the automotive sector was going to behave after the lockdown. Our surprise was that companies resumed operations stronger than before. Premium brands we work with, such as Audi, Tesla and BMW, presented stronger demand than before the lockdown. We adapted our staff accordingly while implementing cost reduction strategies to keep the company healthy.

Q: You have proven successful in leading through times of crisis. What elements have helped that success?

A: Maintaining balance with the help of family and exercise has been essential. At the corporate level, protecting our staff was

Felipe Villareal

our priority. A strong, safe and stable worker will perform well.

Even though there were times when I myself felt uncertain about the future, I needed to provide employees certainty.

CEO of Alian Plastics

A second element was home office. We were not sure how remote work would turn out but through KPIs and clear goals, we made it work. The mental health of everyone was really important, too.

Q: Given the company’s successful strategy of diversification,

Smart Manufacturing to Attract New Customers

how has Alian Plastics’ portfolio changed?

A: The automotive industry continues to be our core business.

The second niche we are focusing on is HVAC, which is a demanding industry in terms of quality and delivery times.

We are handling a just-in-time delivery every four hours. In the beginning, it meant adapting our day-to-day operations since automotive companies pick up products only two or three times a day. I accepted this challenge gladly because we recognized the potential of our operations. This year, we also entered a new industry: toys. We manufactured pieces for iconic characters, such as Barbie and Batman, and for toy animals. We also invested, despite COVID-19. We bought new machines and robotic end-arms and grippers.

Q: The pandemic also drove companies toward greater levels of digitalization. How has Alian Plastics experienced this trend?

A: We started our smart manufacturing projects in 2019, collecting data faster and making better decisions in a really short time. 2020 was a year of consolidation and I feel very proud of our IT team. Having all the tools available to perform

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our job remotely and efficiently provides us with the capabilities to diversify our operations. We enabled Industry 4.0 tools for each one of our presses. These tools send us alerts in real-time to identify area to address, whether it is production, quality, materials or maintenance.

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from the

Q: How did the pandemic influence Evonik and its clients’ business?

A: B2B companies such as ours have an obligation to think about our role in the future and how disruptions in different sectors will impact our products and technologies. This adds up to a massive advancement of digitalization. In a 12-month period, digitalization grew the equivalent of what we went through over the past 15 years. We remain open and confident we will achieve greater levels of innovation and the development of new technologies along the value chain.

Q: Why did Evonik realign its structure to focus on smart materials, specialty additives, and nutrition & care?

A: Our company structure is systematically oriented toward our operational business. The engine of our company consists of the five divisions with their business lines: Smart Materials, Specialty Additives, Nutrition & Care, Performance Materials and Technology & Infrastructure.

In Mexico, this proved to be the right strategy in 2020 for delivering good results. This is particularly due to the diversity of our product portfolio and it is resilient. And we operate and supply practically to all manufacturing and industrial sectors and markets. To increase the value of the company,

Martín Toscano

we target three strategic focus areas: portfolio, innovation, corporate culture.

Q: The pandemic accelerated different trends, among them

President and General Manager of Evonik Industries de México

additive manufacturing. What is Evonik’s focus in this regard?

A: This is an area where Evonik continues to invest, particularly in the high-performance polymers business line where we participate actively. In this segment, we bet on the future

Digitalization, Automation, Relocation Are Here to Stay

while actively developing these technologies. We have a clear strategy that involves investments and acquisitions, as well. We are aware of the promising future this area represents.

Q: What business lines were boosted in Mexico due to the pandemic?

A: In 2020, compared to 2019, we grew our business in Mexico.

Some business lines experienced more challenges than others during the peaks of the pandemic but all businesses have proven to be resilient, among them automotive, agriculture, pharmaceuticals, among others. Depending on the sector, our business lines adapted to market conditions and the general situation. This has been essential to navigate the pandemic.

Q: What changes are here to stay?

A: Process digitalization and automation, the ways we do business and supply chain relocation, mainly from Asia, are trends that are here to stay. Particularly in 2020, the US supply chain relocation created more jobs than FDI. Last year tested all sectors equally. It also allowed us to better understand our

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capabilities as an organization and team in the country. Without question, human capital continues to be a priority and as organizations, we need to understand what the future is and the kind of profile future business leaders should have based on the challenges we are facing today.

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from the

Q: What trends have shaped the aftermarket sector in 2019?

A: MLD specializes in GM vehicles. We are ranked by the OEM as the No. 1 wholesale suppliers of spare parts in stock, customer service and quality. We have expanded our supplier base to premium brands, always looking for better quality. Part of our success is our 84-person team and our ability to supply spare parts for more recent models.

As an OEM supplier, our market niche are vehicles aged 1 to 5 years. After that, they go into the true aftermarket. Within our market niche, we have had to innovate continuously. Today, we are already in the process of integrating spare parts for 2019 and 2020 models. For us, it has been a matter of innovation through product integration.

Q: What opportunities does the arrival of new brands represent for aftermarket companies?

A: GM is highly complex compared to any other brand. ACDelco, GM’s original equipment spare parts brand, has a broad offering, whereas other aftermarket brands like Bosch handle a single product line.

We supply parts for Chevrolet vehicles from bumper to bumper.

We are constantly integrating new part numbers into our catalog

Antonio López

and one of our main strengths is having the spare parts even when the dealership does not. MLD handles an average of more than 11,000 SKUs and 25,000 on demand.

CEO of MLD

Q: What have been the results of your digitalization strategy?

A: Our e-commerce platform has brought great benefits, but these were greater for our customers. Through our platform, they have increased their sales and product lines and have

Digitalization: 200 Percent Sales Increase Story

shortened their response times.

Our platform shows stock availability, price, images, applications and shipping orders. Before, our customers used to take orders by phone, which was a waste of time. Product photos are really important as users’ trust increases when they can compare the photo to the product they need. In the first three months, sales of some of our product lines increased by 200 percent due to greater efficiency of an online operation compared to a phone call. In addition, as the system provides different alternatives, customers can choose a cheaper option and increase their sales accordingly.

Our platform became fully available in December 2017. We launched a beta version with 25 of our best customers in September. The platform can also provide an expenditure record and a record of shipping orders. Over the first month, 33 percent of our product orders were processed through the site. In two years, the figure has increased to 85 percent.

Q: What are the strategies to advance e-commerce among workshops and retail spare shops?

A: Many of our customers had their first e-commerce experience with us. While some were very excited about it, others were weary of the platform. However, when they realized what they were missing, they started to participate in the process. We

implemented several strategies, such as offering sales discounts through the website and reward points.

Today, many of the benefits we offer to our customers are online. For financing or discounts, for example, we require that at least 75 percent of their orders are online. Some of our customers already process all their orders online. This also gives our team more time to take on other responsibilities.

Our site was filled with so much valuable information that even some shops started to use it as a catalog.

Our site drove so much traffic that it slowed down the service. Consequently, we created a user-only service to make it faster. Our distinctive offer is our specialization in GM vehicles, bumper to bumper.

In addition, SKUs change constantly at GM. Through our platform, we update these while maintaining information on previous SKUs to make it easier for potential customers looking for a specific part.

Q: How has your partnership with Mercado Libre influenced your operations?

A: We operate the official stores for Bosch and ACDelco on Mercado Libre. In addition, we have our own site where we offer other products. To be an official store, these brands had to grant us that status on Mercado Libre, which helps us to appear first in online searches.

Our store was the leader in terms of growth in the auto parts sector in 2019 and we are ranked fourth in Mercado Libre’s auto parts sector.

We also trade virtual stocks from other companies on the platform. Mercado Libre has different levels of sellers: there are integrators, operators and regular sellers. We started as a regular seller but we are now considered an operator. As such, Mercado Libre connects you with other brands that want to sell their products through the site. Integrators boost automated sales.

Q: What key elements have you identified regarding digital sales?

A: The longer you take to answer, the more likely clients will go to another marketplace. Online channels also do not have a fixed schedule; they have to remain active seven days a week, all year round, which is what customers are looking for.

Regarding transparency, it is really important to reassure our customers. People want to use marketplaces that can provide warranties, easy payment methods and clear delivery costs.

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Supply Chain | 57

New Supply Chain Standards: Safe, Sustainable, Smart The pandemic brought new meaning to “safe operations.” The challenge to balance the economic impact and virus outbreaks forced governments to end lockdowns and companies to operate under strict health standards. Companies implemented social distancing measures and consequently accelerated the implementation of smart manufacturing strategies. Meanwhile, at the global level, automakers announced unprecedented commitments toward carbon neutrality that will also drive suppliers to meet more thorough environmental standards.

Safe Operations Over the year, MBN has interviewed more than 100 industry leaders and they all agree: “people come first.” Companies are focusing on employees’ well-being holistically, meaning both physical and mental health. For the supply chain in particular, safe operations are meant to prevent, monitor and track COVID-19 contagions.

Implementing social distancing measures required investments from suppliers. In Queretaro, for instance, the automotive cluster reports an average initial investment of about US$28,794, followed by a monthly investment of US$4,479 to keep up with all the necessary protocols and additional health equipment.

Smart Manufacturing Needed More Than Ever Health measures also led to increased digitalization. Industry leaders agreed that manual processes and tracking systems needed to evolve as fewer people were allowed at the plant. “The pandemic demonstrated that even though it might be expensive to embrace automation, it might be costlier to not be prepared for a situation where manual labor is unattainable,” said Daniel Hernández, Director General of the Querétaro Automotive Cluster.

As US vehicle demand started to recover, production capacity needed to increase while keeping all employees safe. “Thanks to USMCA, automotive companies have also experienced greater levels of demand from their customers since August,” said the President of CLAUGTO, Alfredo Arzola.

Automakers Go Carbon Neutral While the industry is coping with the effects of the pandemic, it is not losing its focus on long-term goals, particularly those related to the environmental impact of vehicle production and use. “The global car industry must shift to low carbon to survive,” stated a Carbon Disclosure Project report in 2018. Under the Paris Agreement, countries must meet strict emissions standards, which means industries must follow.

Over the last three years, most major automakers have announced detailed plans to reduce greenhouse emissions and all of these plans focus on the downstream and upstream value chain. Key areas include manufacturing operations, carbon credits and an aggressive offer of electric vehicles. “The environmental trend is gaining strength. Our customers used to focus greatly on auditing our operations and quality systems but now, all of them are Read the complete article More about this topic

asking about the environment, sustainability and green energies,” Felipe Villareal, CEO of Alian Plastics, a Mexican Tier 2 supplier for premium OEMs and EV brands, told MBN.

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from the

Q: What factors allowed Zanini to evolve from a family-owned company to a global manufacturing automotive supplier?

A: First and foremost is having the willingness to do it.

Going global represents a great effort both financially and organizationally, which requires a change in mindset. The key to achieving our global manufacturing footprint has been our leadership in a specific product. Our motivation has been to maintain our leadership in the wheel trim segment. To do so, we expanded our capacities to other continents to supply most of the world’s automotive groups.

One out of every four wheels in the world has Zanini components.

In North America, we hold more than one-third of the wheel trim market. In Europe, we have around 30 percent market share, and we hold around 50 percent of the market in the MERCOSUR region. Mexico was our first venture outside Europe and it has always been a fundamental market for us, considering OEM production strategies. China is our latest venture.

Q: How do wheel trim products influence the end consumer’s final purchasing decision?

A: Beyond aesthetics, wheel trims also have an important functional element. We merge style with functionality as these components are placed in a dynamic element, the wheel while

Jordi Torras

facing rough environmental conditions. Wheels are a very important factor when assessing the vehicle’s attractiveness.

OEMs focus greatly on this element to ensure the customer has a wide variety of options to choose from.

CEO of Zanini Auto Group

Q: How has Zanini adapted to the pandemic?

A: The pandemic has affected the entire industry. We started to feel the effects at our manufacturing plant in China, and in

Continuous Innovation in Wheel Trim Applications

March, we saw our European operations disrupted and a little bit later in Mexico. The pandemic had an overall 25 percent impact on our sales in March, which increased to 85 percent in April and then dropped to 45 percent in May. By June, we had a 30 percent impact on our sales. Despite this, our plans remain intact. We have successfully adapted by being flexible in our costs and operations. We expect positive results by the end of the year, albeit not the same as the previous years.

Q: What are Zanini’s priorities for 2020?

A: We are at the initial stage of ramping up our operations in India. This greenfield will remain our priority as we continue to grow in the country. Another priority is our electromagnetic, transparency, and backlighting products, which are innovative solutions for the market. We are developing this first product line for the Volkswagen Group at the global level. Zanini will also focus on new wheel trim business lines, particularly the inserted pieces in alloy wheels needed for assembly, instead of screws, which can be more expensive. The alloy wheel market went from a threat to a great business opportunity for us.

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Mexico was our first greenfield project and this has been a really positive experience despite the years it took us to consolidate its capacities. Now, we can produce in Mexico any wheel trim component with the quality and requirements demanded by the automotive sector.

VIEW TOP Supply Chain | 59

from the

Q: How did Yanfeng Automotive Interiors (YFAI) transition from a joint venture to a successful automotive company?

A: YFAI was born as a joint venture with Johnson Controls.

Five years ago, Johnson Controls sold its interiors division to Yanfeng, mostly based in China. Yanfeng acquired 80 percent of Johnson Controls’ participation in its plants for interiors. In North America, we have 22 active plants, four of them in Mexico and one more to be inaugurated in the near future. One of our biggest achievements is successfully transitioning from one corporate culture to another. Yanfeng is relatively young in North America but we are expanding our presence in the region. In Mexico, all our plants are focused on automotive interiors but soon we will announce an upcoming plant that will manufacture seat components, as well.

Q: What are YFAI’s strategies regarding local tech design and engineering?

A: In the Queretaro area, our tech design center has 40 Mexican designers who are working on different projects. We are looking forward to doubling our capacity in the coming years. The center is already working on several innovative projects with multiple OEMs, and others. Mexico plays an important role in YFAI’s approach to innovation.

Lourdes Cobos

Q: Which companies have helped YFAI to build its presence in the region?

A; We work with multiple OEMs throughout North America. Our

Operations Manager of Yanfeng Automotive Interiors México

plants in Ramos Arizpe produce components for Toyota in the region, as well as BMW. We have room to grow in the local market and that is one of our current strategies, alongside strengthening our technical and design center in Queretaro to attract more local customers. We are pioneers in automating leather cutting

Automotive Interiors Taken to the Next Level

for automotive interiors. This gives us freedom to design our patterns and adapt to our customers’ needs. At our new plant in Ramos Arizpe, Coahuila, we will have our excellence center where customers can view our product portfolio and prototypes.

Q: How has the pandemic influenced YFAI’s operations?

A: In the automotive industry, adaptability is key. For over two months, our operations were idled, as was the rest of the industry. Naturally, our strategies changed and we adapted to the circumstances by investing time into strategic planning, prototypes, team projects and installing new equipment. I can proudly say that during this period, we did not have to reduce our workforce. Now that we are back, we are stronger, have new projects and, in fact, we are starting our recruitment process for our new plants.

Q: What are YFAI’s plans for the future?

A; We will continue to innovate in automotive interiors. YFAI is focusing on prototypes for doors, instrument panels and center consoles, remaining flexible to our customers’ needs, including

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textures, colors, designs and shapes, among many other elements.

Betting on Mexican talent will be essential to growing not only design operations but also developing a specialized workforce. I see Yanfeng as a strong company in the North American region with a diverse product portfolio.

Social-distancing measures made smart manufacturing capabilities the best option to prevent outbreaks and

Supply Chain | 60

What Should Companies Do to Embrace Industry 4.0?

assure ongoing, efficient operations. Companies, from large manufacturers to small Tier 2 suppliers, are looking for strategies to balance the initial investment of a new technology and cash flow. Leaders from robotics, automation and technology integration solution companies shared their views on the steps companies should consider when embracing Industry 4.0, particularly regarding an adequate ROI analysis.

Typically, Industry 4.0 solutions are complex in hardware and software required to collect, manipulate, store and normalize data. Our solutions are simple, transparent and the initial investment is not that high. We allow customers to get to the same goal in a very clear and secure way. Often, potential customers do not believe that what we are telling them is possible. We usually create a demo solution for the customer to test it. Companies can see the effect that monitoring quality and efficiency can have, representing millions in savings. Once they try the demo, they want more. Demos have helped a great deal

Mauricio Blanc Executive Director Latin America of OMRON

in boosting Industry 4.0 awareness. With USMCA, we expect greater automation levels, higher wages and consequently higher quality for auto parts manufacturing.

The pandemic has highlighted the vulnerabilities of a manufacturing plant that strongly relies on manual labor.

Before COVID-19, digitalization was a fashionable topic the industry was aware of but did not really embrace it. Now, it is critical. Although investments are not yet there, companies are getting their budgets ready to implement these solutions. ROI sometimes took a backseat when the priority was to remain in operation. ABB has been a strong player in Industry 4.0 for years. Since 2019, all of our robots are able to connect to Wi-Fi networks. We have also introduced OmniCore, our new

Sergio Bautista Robotics and Discrete Automation Director of ABB México

controller for smaller robots. This is the sixth generation of our platform, which is now slimmer, lighter, more intuitive and more energy efficient. By the end of 2020, we will release a new lineup of collaborative robots.

The first step to advance Industry 4.0 is to take advantage of cloud and SaaS solutions. Cloud solutions “flatten the curve” of the initial investment. That being said, before technology, there need to be processes. Technology is just a tool to be prepared for strict requirements, short times and many other issues automotive suppliers face. The second element is to establish the data that will be required to make the decision, as well as streamlining the data. Once that is in place, we can decide which solution fits best.

This applies to all companies throughout the chain, from big global players with clearly defined processes to small companies aiming

Sergio Macías Business Consultant Automotive Industry of Blue Yonder

to break through. My recommendation for Mexican companies is to be open to innovation and to adapt. Openness can change and create processes for the better. It is a balance between a long-term vision and being agile enough to achieve short-term results.

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from the

Q: How has Mitsubishi Electric adapted to the digitalization of sales channels accelerated by the pandemic?

A: Five years ago, Mitsubishi Electric started providing digital content to its clients and abandoned paper until we realized that the Latin American market still used it. The pandemic allowed us to bring back our digitalization efforts and renew our bet on digital processes. This extends to our distributors. Every year, they undergo a certification process that assures excellence in their operations and technical support in situ. This certification usually takes place physically but from mid-March 2020, we decided to implement home office schemes and conduct the certification process online, which was quite successful. We are pleased with the results. In fact, by betting on digital channels we have expanded our market scope by incorporating people from Argentina, Colombia, Chile, and Ecuador.

Q: What has Mitsubishi Electric performed in Latin America during the pandemic?

A: We had positive results in 1Q20. Uncertainty emerged in 2Q20 in the face of an atypical market that, combined with the political and economic landscape, created adverse conditions for businesses in general. However, in 3Q20, the market started waking up. Naturally, demand has declined for some products, particularly in the automotive sector that suffered drops of around

Victor Fuentes

40 percent as people were not that eager to buy a new vehicle.

We supply for manufacturing plants focused on ICE vehicles and their related components. As the industry transitions

Director General of Mitsubishi Electric Automation for Mexico and Latin America

toward hybrid and EVs, we know that a plant reconfiguration is on the way. When it will happen remains uncertain but we see opportunities there.

Mitsubishi Electric has had offices in Mexico for 30 years but

Customized Solutions to Embrace Automation

our products have been in the market for almost 50 years. 2020 made us recognize that we could not postpone our bet on direct solutions for our customers. We became a provider for plant renewals, startup projects, equipment reconfiguration, and more.

We are certain Mitsubishi Electric will be a relevant player in this field.

Q: What opportunity do nearshoring practices represent for Mitsubishi Electric?

A: This will continue to strengthen Mexico’s role as an auto parts supplier. Given our location, we can also take advantage of the trade tensions between the US and China. Mexico’s manufacturing quality is world-class and this is in part thanks to access to state-of-the-art technology like Mitsubishi Electric. Companies from Asia, Europe, and the US continue to invest in the country because they recognize the country’s added value. In addition to new investments, I also see opportunities to develop local talent.

At Mitsubishi Electric, we have invested around US$400,000 per year in local universities so they can access the technology we provide.

Q: How does Mitsubishi Electric help companies in Mexico to embrace automation? How do you add value to customers?

A: The quality of our products is essential. Our failure rate is 0.019 percent, which is minimal. This assures the high quality of

the product and reassures our customers regarding the equipment they are acquiring. All of our equipment is tested for at least one year at our manufacturing plants.

We also support our customers through IoT solutions, mainly for machinery monitoring, at competitive prices.

Our philosophy is “change for the better,” which means that any small suggestion that helps to improve the overall process is part of our added value. Industry 4.0, or E-F@ctory as we call it, means that a complete migration is not necessary because we can provide the specific elements that will help our customer to get the best of digitalization, from compressors or pump equipment to edge computing. Regarding the latter, we are performing AI tests for manufacturing operations.

Mitsubishi Electric supports the advancement of E-F@ctory in Mexico by bringing cost-competitive technology to the market. Our solutions do not require large investments. Moreover, we accompany our clients every step of the way. Our solutions are scalable and are set according to our clients’ priorities. Besides, our partnerships can provide support to ERP systems.

Having the correct adviser in this process is key for mutual understanding. Again, our solutions allow clients to select what they need without necessarily migrating all their systems and equipment to smart manufacturing. We are the experts on automation technology. If we combine this with our customers’ expertise, it is a win-win scenario.

Q: What opportunities do companies at the lower level of the supply chain represent for Mitsubishi Electric?

A: There is a before and after of the pandemic. The industry saw the benefits of increased automation levels and two opportunities have appeared. One is to accelerate manufacturing plant automation for companies that are used to manual processes. For instance, one customer-focused on plastic injection had a turnover rate of between 25 to 30 people a week.

This implies high costs when it comes to training. By automating part of the processes, savings in training can compensate for the initial investment while lowering the total ownership costs given that our products have some of the longest life cycles in the market. We are not laying valuable labor off. Rather, our focus is to professionalize the work as robots will not work alone.

The second opportunity is to integrate processes into IoT technologies. This means having real-time information about different plants, including material consumption, scrap, energy consumption, and other key variables. Our IoT solutions are to be launched by 2Q21.

We are now focusing on modernization, migration, and system launches.

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VIEW TOP Supply Chain | 63

from the

Q: How Important is the aftermarket for ZF’s operations?

A: The aftermarket is vital to ZF as we are suppliers of various systems, components and auto parts for the assembly of new cars that sooner or later will need spare parts. We believe that the aftermarket has different drivers to satisfy installers and end-user requirements. Consequently, ZF Services has developed successful strategies to lead this market. Our focus is on building a complete product portfolio.

This business unit is very important to ZF and we have defined the structure and factors that will lead us to success in this market. First, we focus on coverage. As OE suppliers, we meet OEMs’ minimum quality standards and, in some cases, when we identify certain design deficiencies in the original equipment, we correct them. In this way, we can offer a component that will guarantee a continuous use of the vehicle under normal conditions. Our goal is to be able to cover the needs of 95 percent of the vehicle fleet in Mexico. In the case of shock absorbers, we cover 99 percent of the national demand, but there are other areas such as brake systems where we cover 92 percent.

The third factor that we take into account and in which we find ourselves successful is customer service. We can deliver an order within 24 hours. One area in which we have worked

Gerardo Varela

and in which we have a lot of experience is pricing. At ZF Services, we always make sure that the price for the enduser is appropriate, based on the current value of the vehicle.

All these factors have allowed us to position in the mind

General Manager of ZF Services

of not only of the installer and the distributor, but also of the end-user.

Q: How is e-commerce influencing aftermarket strategies?

COVID-19 Breaks Dynamics Between Fleet and Aftermarket Growth

A: At the moment, 93 percent of our sales are done through traditional channels, such as a dealer network, while the rest come from our website, Mercado Libre and Amazon. The crisis generated by COVID-19 has given us the opportunity to grow in this segment – sales through e-commerce increased 74 percent in April and May. However, this is not sustainable over the long term because once we return to the new normal, the growth of e-commerce is going to slow down.

Q: Is the drop in consumption of new vehicles an opportunity for the aftermarket?

A: It is an opportunity but a very limited one. New vehicle sales have been falling since 2016 and that trend will continue.

According to AMDA, car sales will drop more than 20 percent in 2020 compared to 2019 due to the pandemic. Although it is true that this drop will not generate growth in the vehicle fleet, there are two factors that must be taken into consideration: most components and auto parts are manufactured in China and the peso has devaluated by up to 26 percent this year, while these types of products are bought in dollars. This has caused auto parts made in China to increase in price from 10 to

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15 percent. That said, with the decrease in people’s purchasing power and unemployment, it is difficult for the auto parts sector to benefit from this crisis. Gone are the times when less growth in the vehicle fleet meant more growth in the aftermarket. That correlation no longer exists.

Conference

Supply Chain | 65

Highlights

Human Capital Management and Challenges of New Labor Standards Mónica Doger Director General of CLAUZ

Marcela Barreiro HR Director at Daimler

Maite Delgadillo HR Director of Scania

Evelyn Erendida Sales Director of Lavartex

Luis Monsalvo Founding Partner at Monsalvo Duclaud

U

SMCA brought tougher rules of origin for automotive goods. Conciliation and effective union representation under USMCA’s Chapter 23 are now the new normal. At the same time, the pandemic forced the industry to rethink how it managed its

workforce, bringing challenges but also great opportunities for companies, agreed panelists at the Mexico Automotive Summit 2021 on Mar. 25. The panel, “Human Capital Management and the Challenges of New Labor Standards,” was moderated by Mónica Doger, Director General of CLAUZ. “The changes in the new treaty are aimed at a concept that for most companies in Mexico is difficult. However, for those that have already experienced a trade union environment, it is easier: the democratization of labor relations,” said Luis Monsalvo, Founding Partner at Monsalvo Duclaud, a law firm specialized in labor, employment and social security.

Faced with these changes, companies like Daimler have had to rethink the way they manage human capital. “Our main resource is always human capital. We have handled these changes gradually.

During the pandemic, we have reacted in different ways and we are not the only ones who have faced this,” said Marcela Barreiro, HR Director at Daimler. Evelyn Gonzalez, Sales Director of Lavartex, said her company has union delegates at each of its plants, with whom they organize quarterly meetings to establish strategies.

“As a supplier to the automotive industry, by having this system in place and complying with these regulations, we are one step ahead in being able to offer certainty to our customers.”

At Scania, a Swedish company that manufactures heavy trucks and buses, the transition has been smooth, said Maite Delgadillo, HR Director of Scania. “The practices required by the new treaty were already in place and we do not have anyone outsourced.”

Delgadillo pointed out that one of the characteristics that has allowed the company to move forward is flexibility, agility and change management.

Mental health has also been a concern for companies during these months. “When we started to notice that the pandemic was going to last longer than expected, the first thing we asked ourselves was what was happening to the emotional health of our employees,” said Barreiro. Among the actions Daimler implemented, she said, were forums to communicate directly with everyone in

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the company so they could feel heard despite the distance. The company also launched online yoga and meditation courses and other activities to take care of employees’ mental state.

Ripipsa: How to Climb the Supply Chain Ladder Francisco Santini CEO of Ripipsa

Keys to Becoming a Successful Mexican Tier 2 Supplier Jessica Madrid CEO and Co-Founder of Laser & Manufacturing

A Cleaner, Easier Way for Auto Industry to Cut Through Steel Mauricio Torres

Director General Aqua Machinery

Bechem: Lubrication Technology Adapting to the New Normal Claudia Mora Director General of Bechem Lubrication Technology Mexico

Material Technology for Heavy Vehicle Auto Parts Javier Gómez Plant Manager of Eaton San Luis Potosi

NSK: Supporting Local Suppliers Javier García Plant Manager of NSK Bearings Manufacturing Mexico

Kayser Automotive Adapting to The Future Ignacio Sanz Director in Mexico of Kayser Automotive

Pfeiffer Vacuum: Addressing Battery Manufacturing Needs Daniel Kuchenbecker Global Market Manager Industry of Pfeiffer Vacuum

ABB: Battery Trays Are Transforming Manufacturing Processes Sergio Bautista Robotics & Discrete Automation Director of ABB México

Blue Yonder: Artificial Intelligence for Demand Forecasting Sergio Macías Business Consultant for the Automotive Industry at Blue Yonder

4

Sales & Mobility Historic sales lows were recorded in April and May 2020. Overall, light-vehicle sales dropped 28 percent in 2020, while heavy-vehicle sales plummeted 37.8 percent. Less than a million light vehicles were sold throughout the year, reaching volumes similar to 2012. Only 50,875 heavy vehicles were sold. Market leaders remained unaltered in both heavy and light vehicle sales.

However, Asian companies are gaining strength, notably Toyota and Kia in the light-vehicle and Hino and Isuzu in the heavy-vehicle segment.

Nissan, GM and Volkswagen represented almost 47 percent of total light-vehicle sales, while Freightliner and Kenworth alone represented 55.5 percent of total heavy-vehicle sales. Just like in production operations, vehicle dealerships were forced to embrace digitalization.

Immediacy, transparency and customization remain the most important elements dealerships and digital marketplaces must ensure to build a successful digital sales experience. AMDA took a prominent role in strengthening dealerships’ digital capabilities through partnerships with key e-commerce players and data providers.

As new vehicle sales dropped, sales of used vehicles posted a slightly positive trend. This created the perfect environment for the first Mexican unicorn to emerge. Kavak, an online marketplace for used vehicles, reached a valuation of US$1 billion in October 2020, allowing the company to aggressively expand its operations to major cities in Mexico and Argentina.

4

Sales & Mobility

70

Analysis Pandemic Deals Sales a Heavy Blow

71

Conference Highlights Taking the Leap Into Digital Sales

72

View From the Top Carlos García CEO of KAVAK

73

View From the Top Jorge Dávila Head of the Automotive Marketplace at Mercado Libre

74

View From the Top Fernando Enciso Director México of Surman

76

View From the Top Israel Escutia CEO of GarantiPlus Mexico

77

View From the Top Santiago Fernández Executive Vice President of Vehicles, P&C and Health at AXA Mexico

78

View From the Top Liliana Anaya Director General of AMAVE

79

View From the Top Mauricio Medina CEO of TIP México

81

Analysis Sales Go Digital; Mobility More Integrated

82

Roundtable What Is the Path Toward Sales Recovery?

83

View From the Top Gretta González General Manager of Shared Rides at Uber México

84

Conference Highlights Disruption Spurs Mobility Transformation

86

Spotlight DiDi Mujer Supports Women Empowerment, Protection in Mexico

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Content Links

Sales & Mobility | 70

Pandemic Deals Sales a Heavy Blow TABLE 1. VEHICLE SALES BY SEGMENT

Due to the impact of the pandemic, industry leaders agree policies need to be implemented to accelerate the automotive

2019

2020

Variation

1,317,931

949,353

-28.0%

261,733

210,554

-19.6%

Luxury

47,156

31,249

-33.7%

enable companies to survive and maintain the highest possible

Sports

7,667

5,674

-26.0%

employment levels,” said Guillermo Prieto, President of

Minivans

16,952

9,916

-41.5%

Pickups

193,536

155,411

-19.7%

Subcompact

447,619

284,620

-36.4%

SUV’s

343,268

251,929

-26.6%

Commercial vehicles

81,788

50,875

-37.8%

Freight

66177

44343

-33.0%

Passenger

15611

6532

-58.2%

Light vehicles Compact

sector’s recovery. “The international experience of how to deal with the COVID-19 pandemic provides us with a public policy table that has revealed favorable health and economic outcomes, from strong fiscal and monetary incentives that

AMDA, to MBN. Vehicle sales took a hit of 28 percent in light vehicles and 37.8 percent in commercial vehicles in 2020 compared to the previous year. The 949,353 light vehicles sold represent a 41 percent decrease from the peak of 1.6 million units reached in 2016. Today, the country reports similar sales volumes to 2012.

As for commercial vehicles, in 2018, 82,269 freight trucks and passenger buses were sold, while in 2020, sales peaked at 50,875 vehicles, a 38.2 percent drop.

Light Vehicles: Market Leaders Nissan, GM, Volkswagen, Toyota and Kia, Mexico’s Top 5 OEMs, represented 62.64 percent of the market in 2020. Although light

TABLE 2. TOP 15 OEM SALES RESULTS

vehicle sales overall plummeted 28 percent, some brands took a worse hit than others. Among the Top 5, Volkswagen took the heaviest blow with a drop of 30.6 percent, followed by GM with

Rank

Brand

2020

Var

Market Share

1

Nissan

194,427

-27.5%

20.48%

2

GM

150,256

-29.1%

15.83%

3

Volkswagen

99,750

-30.6%

10.51%

quickly escalated from 3.62 to 7.75 last year, surpassing Chrysler,

4

Toyota

76,577

-27.5%

8.07%

Honda and Ford. On the opposite side, Nissan, Mexico’s top

5

Kia

73,620

-22.9%

7.75%

6

Honda

47,982

-34.3%

5.05%

7

Mazda

46,117

-23.2%

4.86%

8

Chrysler

43,678

-21.5%

4.60%

9

Ford Motor

37,162

-35.4%

3.91%

10

Hyundai

32,231

-29.3%

3.40%

11

Suzuki

25,975

-16.8%

2.74%

to maintain market leadership. “The most challenging thing was

12

Renault

25,516

-22.4%

2.69%

to understand what our employees, our distributors, Mazda

13

SEAT

15,032

-38.2%

1.58%

CEO of Mazda.

14

Commercial vehicles

14,788

-28.1%

1.56%

15

BMW

11,367

-36.2%

1.20%

29.1 percent.

Toyota and Kia appear to be gaining market share. In 2016, Toyota and Kia ranked eighth and fourth in terms of sales. Toyota has grown its market share from 6.53 to 8.07 percent, while Kia

seller, has lost almost 4.5 percentage points of market share over the last four years. GM dropped 3.3 points and Volkswagen 2.3 points. Nissan and GM’s volumes still exceed other brands by far but should trends continue, the leaderboard might shift in the next five years.

When addressing the challenge of selling new vehicles in times of a pandemic, industry leaders agree recovery will take until 2024. Moreover, tailor-made strategies need to be implemented

Corporation and our customers wanted,” said Miguel Barbeyto,

Commercial Vehicles: Market Leaders Freight and passenger vehicles were influenced by bottlenecks in plating, reduced mobility and inter-city transportation, as well as a boost in e-commerce. Freight trucks represented 87 percent

Source: Ministry of Economy

of the total sales in 2020, with the rest being passenger vehicles.

Although the sector overall took a 37.8 percent hit, the average sales decline for companies was 50 percent, with Mexican OEM Read the complete article More about this topic

Dina the worst performer, posting a 93.4 percent sales drop. On the other extreme of the chart, Isuzu and Kenworth suffered 26 and 29 percent reductions, respectively.

Conference

Sales & Mobility 71

Highlights

Taking the Leap Into Digital Sales Guillermo Rosales Director General of AMDA

Jorge Vallejo President & CEO of Mitsubishi Motors

Carlos García CEO of KAVAK

Jorge Dávila Head of Vehicle Market Place of Mercado Libre

Fernando Enciso CEO of Grupo Surman

Israel Escutia Director General of GarantiPLUS

O

n Thursday, Mar. 25, Mexico Automotive Summit 2021 gathered leaders of the digitalization sales process to share their experience and challenges of today and tomorrow to reinvent digital sales in the industry.

In 2020, the industry experienced a 28 percent drop, which has been the most significant decrease since 2018, according to Rosales. “Last year, the industry sold 949,000 vehicles, which is half of what we sold during the industry’s highest selling year: 2016,” he said. Despite the crisis, Rosales observed how players of the automotive sector reinvented processes and quickly moved into e-commerce.

But in a completely new scenario, what are the best practices for online sales? Fernando Enciso, CEO of Grupo Surman, was the first to address this subject by stressing that humans are the most important factor. “We are the creators of all the data used in digital tools,” he said. Jorge Vallejo, President and CEO of Mitsubishi Motors, considers human resources an irreplaceable factor. That being said, there are issues to consider in moving toward digitalization. “There is a generational issue, even if we do not want to see it. There are many salespeople who are not going to professionalize and migrate to digital channels.”

Carlos García, CEO of KAVAK, a company born digital, offered a different perspective. “For us, the path has been the opposite.

There are consumers who are ready for this kind of approach but the niche is still very small. Our challenge has been to find the hybrid between digital and traditional.” García commented that one of the challenges in this process is educating the consumer to trust this new market channels and the sales team to work on an omnichannel strategy. “The automotive industry, once it matures, must be omnichannel,” said García.

Jorge Dávila, Head of Vehicle Market Place of Mercado Libre, said sales processes needed to be innovated. “With the pandemic, the digital transformation pushed us to change and find ways to continue working.” Israel Escutia, Director General of GarantiPlus, addressed an additional challenge that comes after the sale. “Aftersales is always a fundamental pillar of profitability and customer satisfaction in the automotive industry.” For this reason, offering a guarantee is increasingly important. “We created an opportunity so clients are not limited

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by time or kilometers. GarantiPLUS goes beyond the traditional approach and integrates life insurance, mobility guarantees and road assistance,” Escutia said.

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from the

Q: What opportunity did Kavak find in the Mexican used-vehicle market?

A: We saw an opportunity for Kavak to participate in this segment to provide all necessary warranties to consumers to trade their used vehicles. We learned that given the informality levels of the market, there was no room for those transactions to be financed, which made it more difficult for a potential customer to sell or purchase a used vehicle. Globally, between 80 and 90 percent of used vehicles are financed. In Mexico, this figure drops to just 5 percent. Kavak has been in the market for four years and, during this time, we have become the country’s No. 1 platform for selling and purchasing used vehicles. More importantly, given the current circumstances, we are the only alternative that allows people to sell or purchase their vehicle without leaving their home.

Q: How does Kavak manage aftersales services?

A: When a customer buys a vehicle through Kavak, they should know our vehicles have passed an exhaustive 240-point inspection to guarantee the vehicle is in optimal condition. In addition, we recondition the vehicle in terms of aesthetics. We take the vehicle to our potential customer’s home for a unique experience. Our customers have a three-month period to test for any malfunction.

We have an application called Kavak 360, a digital support platform where the user can manage any malfunction, service,

Carlos García

maintenance or any other process related to the vehicle. We also offer an extended-warranty period of a year, which includes maintenance services.

CEO of KAVAK

Q: How would you describe Kavak’s unique features?

A: We are the only online platform where you can find more than 2,000 vehicles in optimal conditions and within any price range. Moreover, we are the only platform in Mexico with a

Transforming the Used-Vehicle Market for Good

unique seven-day or 300km return policy. Despite the market’s informality, we can provide access to financing schemes through traditional banking institutions. Buying a vehicle is one of the most important decisions for them and we want to guarantee an excellent experience. Our consumer-centered culture is our biggest differentiator.

We are more advanced in understanding what the customer wants. All of our business initiatives are 100 percent focused on escalating all the elements we know our customers are looking for.

The wow factor we deliver to our clients along with their vehicles makes them want more from us after the sale is concluded. We are exploring aftersales experiences where every maintenance, financing scheme, or alternative model is easier for the client. We want them to have a trustworthy ally to solve all the annoying issues you have to deal with about your car. We are not following trends but creating them.

Q: What is your five-year vision for Kavak?

A: Kavak will be the unquestionable leader in Mexico in its segment.

In five years, we will be operating in a few more countries across

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the region, with a market share similar to what we enjoy in Mexico.

All consumers involved in purchasing, selling, or financing a vehicle will see Kavak as their first option given the benefits we will offer.

Our headline will be: Kavak Building Latin America’s Best Team. In five years, we may go public as well. We have great ambitions.

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from the

Q: What elements have made Mercado Libre the No. 1 online vehicle marketplace?

A: I think that beyond being one of the market leaders in e-commerce, we have been sensitive, especially in 2020, to the ups and especially the downs the sector has faced regarding sales. Last year, we accompanied dealerships on their journey to embrace digital channels. We remain the No. 1 digital vehicle marketplace, with more than 100,000 active publications, a figure that remained constant over 2020.

Growth was also driven by the solid performance of e-commerce.

We focus on a quick and smooth experience. It is common for people to be afraid of digital purchasing channels but we have made the purchasing and selling experience easy and simple, including the processes of down payment for the vehicle.

Q: How has the vehicle marketplace evolved within Mercado Libre?

A: All words related to the automotive marketplace, including vehicles, trucks and motorcycles, are among the most searched words in the platform. This segment is strategic for us. Mercado Libre has a flexible ecosystem that can be easily combined with others. As an example of a multi-ecosystem of multi-ecosystem project, we have worked with Nissan and Peugeot to launch their

Jorge Dávila

digital platforms, which connect with Mercado Pago, our payment platform that allows brands to have their own payment methods platforms within the Mercado Libre ecosystem.

Head of the Automotive Marketplace at Mercado Libre

Q: How do Mercado Libre’s partnerships with dealerships work?

A: Eight of every 10 people start their purchasing journey online.

Five years ago, the challenge was how to generate the first digital contact with customers, as they had to visit several websites. The

Transparency, Immediacy Key Elements of Digital Sales

challenge now for dealerships is to embrace the digital process and to take the sales process to the digital world, which is why we created our down payment system. We organized more than 23 webinars in 2020, with more than 4,800 people from the automotive sector. We have created partnerships with AMDA, including a digital certificate for salespeople who want to learn about digital channels, from basic to more advanced topics.

We also focused on two key topics for the sector. One is transparency, a topic to which we are really committed. Consumers are looking for transparency and at Mercado Libre, we always make sure there are enough pictures, videos, clear descriptions and sufficient technical information for the customer to make an informed decision. The second key element is immediacy; people are looking for quick responses. We use text messages within the platform so consumers can chat with the vendor. We also enabled WhatsApp features for quicker contact and clients can also make a phone call from the app.

Q: What lies at the heart of the digital sales process?

A: Dealerships must be open to learn new things and relearn

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others. Before the pandemic, we tried to make digital sales a complement of the traditional sales process. When the pandemic arrived and lockdowns were enforced, this focus was reversed.

We now design the digital process so the sales floor acts as an extension of the digital environment.

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from the

Q: What lessons did Surman learn in 2020?

A: We were fortunate to understand at the beginning of the pandemic that this crisis would be critical for the industry. Like all crises, we also knew that there would be positive and negative sides to it. That said, we decided to embrace the former. Surman is a group of more than 100 car dealerships that has grown rapidly. During the first months of the pandemic, we focused on integrating our processes. We recognized that it was a very good time to reorganize the company internally because there were very few sales. The first important step we took was to refurbish our dealerships. We provided maintenance to all our ramps and systems.

We also used this time of uncertainty to work on evolving our organizational culture. When people are in their comfort zone and when they feel they have mastered all the issues in the industry, it is difficult for them to accept change. When the pandemic started and nobody knew what was going to happen, dealerships closed, production stopped and people went home.

We felt it was the right time to make radical changes.

We created a leadership program called “Surmanizate 3.0.” This program lasted four months and its goal was for our team to understand and embrace the change we were going through, mainly in the digital sense. We already had several technological

Fernando Enciso

projects in the pipeline to integrate all our systems and to illustrate information in a structured way, with insights and metrics. The main objective of this new program was to make all our leaders lose their fear of digitalization and to make them

Director México of Surman

understand that it is not only about achieving sales targets but also optimizing everything that comes after.

We used to define our budget based on each dealership’s track record. Now, budgets are planned based on the potential of each

Surman Embraces Digitalization at Automotive Dealerships

dealership. Thanks to these changes, we are now a stronger and more coordinated group.

Q: What were the main challenges Surman faced in terms of digitalization?

A: The first thing that is necessary to start this transition is to reduce the resistance to change. I believe that platforms like Kavak or Mercado Libre cannot replace a car dealership; they add value to the chain. After selling a car, there are many elements that require human interaction and that is where dealerships still have room for improvement.

A big change introduced by the pandemic is that people no longer see digital as a second showroom or support tool. That change in mindset helped us to get more people to embrace this transformation. We also learned how to take advantage of all the data that we already had in our platform but that was just sitting there. Now, for example, we build personalized marketing strategies with this information.

Q: What role will aftersales service companies play in Surman’s strategy?

A: Their role will be vital. We are building our aftersales strategy with some of them. A few years ago, I attended NADA Dealer Academy to understand all the indicators and variables that are

taken into account in the US automotive sector. I also had the opportunity to manage certain dealerships in that country and I realized that it is a totally different business than in Mexico. In the US, the business is not in selling cars but everything that follows. I think Mexico is moving toward that but at a slower pace.

Insurance, extended warranties and even sanitization will be important elements in maintaining business profitability.

Q: What is Surman’s outlook for EV and hybrid vehicle sales?

A: Sooner or later, we will all have to ride that wave.

If you look at the industry worldwide, Mexico is a strategic player because of the industry that is already established here, as well as the country’s geographical position. However, Mexico is not the largest consumer of vehicles in the world. Our market is almost the same size as California’s.

The country still has room for growth and EVs will be part of that. Saying we do not believe in EVs would be like saying we do not believe in cellphones. We will probably do things differently than other countries.

First, we will start to see more hybrid and electric vehicles on the streets and then the private sector and the government will start to invest in more charging infrastructure. The downside of this transition will be its impact on the aftermarket, as these cars will need fewer and less frequent replacements, so we need to adapt our business.

Q: How has Surman strengthened its fraud prevention strategies as it goes digital?

A: New technological mechanisms such as new credit processes will help prevent fraud. Today, we still do basic checks, making sure to ask for a personal ID and checking that the contract matches the signature.

Nowadays, so much information is already available and can be gathered for analysis that it will make it more difficult for fraud to occur.

Q: What are Surman’s expectations for 2021?

A: We seek a professional, personal and spiritual balance for our staff. We still have a lot to learn and accept. We are living in an unhinged world and the pandemic forced us all to pause and find a middle ground. Regarding our corporate development, we expect this year to be challenging, as well. We will still see the full effects of the production shutdowns that occurred in 2020. For several brands, we do not have enough inventory and there is already more demand than supply in some cases.

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from the

Q: GarantiPlus is a market leader in extended warranties in Spain. What led the company to expand into the Mexican market?

A: GarantiPlus Mexico is the merger of two holding companies, one made up of Mexican entrepreneurs and another encompassing Spanish companies. In 2015, when we started to do market research in Mexico, we realized that there was a great opportunity in the extended warranties market. We analyzed the company’s business model in Spain and we introduced it to Mexico in 2016. At that time, all warranties in the market were restricted to time and mileage, meaning that all companies offered warranties of one year or 15,000-20,000km. In Spain, the model considers unlimited mileage, so we decided to take this opportunity in Mexico. We were inspired to come to Mexico given the opportunity to take the limits off warranties, providing customers with more benefits and taking advantage of the growth opportunities in the Americas.

Q: How are you tailoring your products to the specific needs of the Mexican market?

A: Removing the mileage limit on warranty contracts is one way, allowing customers to enjoy their warranty for much longer. Before this solution, many customers were invalidating their warranty in less than three years. In Spain, all used

Israel Escutia

vehicles must be sold with a warranty, even between private individuals. In Mexico, this is at the discretion of the person selling the car.

CEO of GarantiPlus Mexico

Q: GarantiPlus offers a unique coverage portfolio for extended warranties. What are the benefits these programs provide to customers?

A: We are a dynamic and flexible company. We are the only

Extended Warranties: High Potential Market in Mexico

player in the sector that not only provides warranties for new and used vehicles, but also for tires, heavy vehicles, motorbikes and household appliances, among others. We are diversified. In the particular case of the automotive industry, we are helping certain tire dealers and distributors to add a warranty fee to the final price of the product.

These kinds of initiatives have increased customer satisfaction.

We enjoy great acceptance in the recreational vehicle division, whether jet skis or quad bikes. Clients are looking to extend their warranty from two to three years. This has been fantastic for us because we believe this market will continue to grow.

Q: How do you plan to make GarantiPlus a benchmark in the Mexican extended warranty market in 2021?

A: One of our main objectives this year is to become the most innovative warranty company in the market. We have already made a difference by introducing a product that did not exist in Mexico years ago. We offer tailor-made products and now we are introducing other solutions, like our life insurance policy.

All these factors will be key to achieving our goals. In the

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medium term, our interest is to continue growing throughout the continent. In March, we will start operations in Chile and we will continue expanding in other countries in the region. Our main objective at GarantiPlus is to ensure the mobility of our clients so they can face any contingency with our help.

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Q: How has vehicle insurance transformed over the years?

A: The vehicle insurance industry has transformed but not as quickly as we would like. Despite the fact that insurance is a civic duty, its penetration in Mexico is still low. Only 25- 35 percent of vehicles in Mexico are insured, meaning that when a person is stuck in traffic, probably only one in five cars around you is protected. This should not only raise concern among drivers but also among pedestrians, since road accidents are one of the main causes of death in our country.

Q: What added value does AXA provide to companies seeking to insure their fleets?

A: Companies usually have two types of fleets: light and heavy vehicles. The latter is most linked to their economic activity due to logistics operations, which is why it is the area in which we have innovated the most. Our experience over the years has allowed us to recognized that insurance alone is not enough. Beyond a refund, in case of theft or accident, companies are looking for prevention strategies. A tracking device is not enough to recover the vehicle or the stolen goods. Today, there are devices that allow us to mine data to detect driving habits and provide training where appropriate.

According to the statistics we collect, we can also suggest alternative routes to companies.

Santiago Fernández

Unfortunately, theft rates in Mexico have not decreased and seven out of 10 vehicles stolen in Mexico are lost in the State of Mexico. At AXA, we aspire to stop being a payment agent and to

Executive Vice President of Vehicles, P&C and Health at AXA Mexico

become a caretaker of people and their assets.

Q: How has the pandemic transformed the insurance industry?

A: The users’ relationship with their cars has changed. If people

Mobility Restrictions, Economic Fallout Give Insurers the Blues

need to take their car out, they do so when there is less traffic congestion. This has generated a decrease in the number of car accidents in cities and therefore, companies are forced to offer more competitive prices. The other facilitator of change is the economic crisis. Unfortunately, this situation has led families to prioritize their expenses. We have observed that a significant number of customers have decided to cancel their car insurance prematurely. This is not because of increasing competition but because of reduced vehicle use. The number of insured cars has decreased in recent months; however, we expect a recovery as the lockdown eases.

Our strategy in this situation is to offer fair prices to our customers, accompanied by the customer service that has always characterized us. AXA continues to rank No. 1 in car insurance surveys.

Q: How has the insurance sector advanced in its digital transformation?

A: Without a doubt, human contact in the insurance sector in Mexico is still a major factor. COVID-19, however, was a turning

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point for the industry. Everyone’s buying habits have changed and this industry is no exception. We do not need human contact to sell insurance. Nevertheless, users do need and request assistance to buy it. In response to this situation, our agents have relied on digital channels to advise their clients.

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Q: What are AMAVE’s priorities for the leasing sector?

A: AMAVE’s goal is to promote an environment for leasing and fleet managers to grow their operations with commercial and light vehicles. The association addresses key issues for the sector, the most important being the need for a proper legal framework for our business. Other topics include visibility and formality in automotive leasing, while promoting a financial culture that supports the development of the automotive industry, as well as the renewal of the vehicle park. We also aim to provide competitive mobility alternatives for companies and individuals. To reach our goals, we need to enable communication channels with local and federal authorities to address regulatory issues.

Q: What are some of the lessons learned from the pandemic?

A: After the pandemic, we see three different scenarios. In the short term, investors will remain cautious, while in the midterm, mobility will regain regular levels. In the long term, we see automotive leasing growing. In times of uncertainty, we believe leasing promotes entrepreneurship while supporting SMEs and helping them to avoid losing capital and to focus on their business.

Q: What benefits do AMAVE members enjoy?

Liliana Anaya

A: Our membership is based on four pillars. First, training and continuous education through the partnerships we have with key players. We offer courses, forums and webinars in which industry leaders are involved. A second pillar is our research

Director General of AMAVE

and analysis department that gathers data to deliver business intelligence with the help of industry associations, including ANPACT and AMDA. This increases the visibility of the leasing market. It is important to note that, previously, there was no data available for our sector. We are proud to say we have changed

Only One in Five Mexican Companies Uses Leasing

that. A third pillar is the way we address all the regulatory procedures companies need to perform, while serving as a channel to connect with local and federal authorities. The fourth pillar is our work toward a regulatory framework that influences the development of the sector. We have a specialized committee to address each of our pillars.

Q: What are AMAVE’s priorities for 2021?

A: Our No. 1 priority is to strengthen the legal framework that protects leased assets. Unfortunately, Mexican law has failed to provide effective mechanisms that allow companies to retrieve leased assets following overdue payments. Regaining control over a leased asset is really difficult and it can take up to 24 months. After that time, the vehicle is already depreciated and often misused. We drafted a proposed amendment to the Mexican Trade Code to create a preventive measure that allows the retrieval of physical assets leased due to lack of payment. In practice, this will allow companies to retrieve the goods while the trial takes place. Should companies lose the case, a similar product will be returned to the other party. The Mexican Ministry of Economy has given its consent to present this bill to Congress.

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We will also maintain our focus on improving regulatory procedures. It is important for the legal framework to strengthen the leasing market and to make regulatory processes agile in strategic states.

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Q: You have mentioned before that leasing is growing in the Mexican market. How has this trend evolved and how ready are companies to embrace this model?

A: According to AMAVE figures, leasing grew around 9 percent in 2020 compared to 2019, despite the pandemic. This implies that leasing is a financial product that works best in times of uncertainty and crisis. When companies are unsure about buying a new fleet, they turn to leasing schemes that allow for a better financial performance. Leasing provides companies with flexibility. The pandemic has helped to grow this segment and it has now become a viable product for many companies.

The industry saw growth not only in units leased but also in fleet management. This means that companies decided to outsource all the services associated with fleet management, including maintenance and legal fees. Fleet management grew more than 14 percent in 2020, according to AMAVE, despite it being a complex year.

Q: How did light and heavy-vehicle leasing perform in 2020 in Mexico?

A: Light-vehicle performance was good. The best segment was light trucks since e-commerce boosted last-mile deliveries and brought growth to this segment. At some point, demand was

Mauricio Medina

greater than the number of available units.

As for freight trucks, there was a slight setback in certain segments given the lockdown measures enforced across the

CEO of TIP México

country. On the other hand, supermarkets and other convenience stores required greater volumes in April, May and June 2020.

By the end of the year, there was a lower utilization rate in the heavy-vehicle sector, which was also influenced by the country’s overall economic performance.

Leasing: Perfect Tool for Uncertain Times

Q: TIP has innovated in different business lines. How have these initiatives impacted your position in the market?

A: We are the only company in the country with available stock of cargo dry vans, which can be leased from one month to seven years. Large self-service stores turned to us to better manage additional storage space. Although there was greater demand due to the pandemic, we are aware that it is seasonal rather than long term.

By the end of the leasing period, most leasing companies need to sell the asset. We automated and digitized our remarketing process by creating an online platform for auctions, where units are posted and interested parties place their offer, thus creating a really transparent process that follows all legal and tax requirements. This platform makes it easier for potential buyers to find a unit. The portal has worked very well and through this channel we are selling our used vehicles after the termination of our leasing contracts with clients.

Q: How is TIP collaborating with AMAVE to grow leasing in Mexico?

A: AMAVE is a young association, having been founded only five years ago. I am currently the president of the association for a two-year term. We have a number of initiatives, one of

which is a bill to reform the legal framework to ensure that leasing is recognized and to guarantee a faster process for recovering leased assets. Another objective is to share the benefits of leasing. We have grown but we need to communicate the leasing advantages. The companies that formed AMAVE represent more than 50 percent of the leasing market in the country.

Q: Which segment represents major potential for leasing to grow?

A: There are a number of segments. Light vehicles will continue to grow, for instance. Mexico’s potential depends on the renovation of the vehicle park. The heavy-vehicle park is on average around 20 years old, which means there are units that are 30 to 40 years old, while others are less than 5 years old. This is an opportunity for the country.

The intention is to promote the fact that leasing allows companies to renew their fleets while saving co n s i d e r a b l e co s t s i n te r m s of f u e l e ffi c i e n c y, maintenance services and more.

Q: What is your perspective on the adoption of electric and hybrid vehicles?

A: Two years ago, I would have said that the trend seemed promising. However, the pandemic negatively influenced the expectations regarding electric and hybrid vehicles. Growth has not stopped but it has decelerated. At the same time, the federal government continues to bet on fossil fuels, instead of renewable technologies and electrification. There are mixed signals regarding these technologies.

That being said, leasing works well for electric vehicles.

There is no better option to try an EV than leasing.

Individuals and companies can lease a vehicle and see if it fulfills their expectations. Approximately 9 percent of the electric and hybrid units in the country are purchased by leasing companies, almost one out of 10 vehicles.

Q: With mobility paradigms changing, what benefits can leasing bring to individuals?

A: Leasing offers tax benefits for companies and i n d i v i d u a l s with e n tre p re n e u r i a l a c tiv iti e s . Fo r individuals, benefits also include renewing the vehicle every two to three years without having to purchase it.

You can arrange different schemes where you spend less on maintenance, while enjoying more competitive prices on telematics and insurance, given that leasing companies can get better prices due to the volumes they handle.

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Sales & Mobility | 81

Sales Go Digital; Mobility More Integrated Digital channels are the new normal. As the pandemic accelerated e-commerce, materializing the leap that was expected to take years, the automotive industry embraced the challenge of digital sales through diverse strategies, from partnerships with large e-commerce players and banks to extensive training programs focused on the online sales channel. Dealerships are no longer in the business of selling but are also creating content. “Government orders to close dealerships and mobility restrictions forced the market to take a big leap into digitalization,” said Guillermo Rosales, AMDA’s Director General, in an interview with MBN. The Challenge to Go Digital: Key Elements AMDA, grouping more than 2,400 dealerships in Mexico, has taken an active role in enhancing the capabilities of leadership at the helm of sales forces through partnerships with Mercado Libre, Google and JATO Dynamics, among others. “Five years ago, the challenge was how to generate the first digital contact with customers, as they had to visit several websites. The challenge now for dealerships is to embrace the digital process and to take sales to the digital world,” Jorge Dávila, Head of the Automotive Marketplace at Mercado Libre México, said. “Consumers are looking for transparency and at Mercado Libre, we always make sure there are enough pictures, videos, clear descriptions and sufficient technical information for customers to make an informed decision. People are also looking for quick responses.”

Brands Going Digital Big players in the Mexican market have announced strategies to strengthen their digital channels, as well. Volkswagen considers the digital transformation a positive consequence of the COVID-19 pandemic and it celebrates its accomplishments in terms of its digital presence in a market that constantly demands more and more digitalization. Segments like luxury vehicles, however, have noted that real-life experience is essential in vehicle sales. “The pandemic has shown that offering a 100 percent digital experience is not enough. When someone buys a luxury vehicle, the contact our dealer network has with that person is still crucial,” said Raúl Peñafiel, Director General of Jaguar Land Rover.

Shared Mobility Before the pandemic, industry leaders agreed that shared mobility had arrived to stay. However, as lockdowns and social distancing measures became stricter, this trend seemed to falter. When asked

KEY ELEMENTS THAT PLAY AN IMPORTANT ROLE IN DIGITAL SALES + Immediacy + Transparency + Customization

about her perspective on mobility trends, Gretta González, General Manager of Shared Rides at Uber México, said the pandemic had permanently changed people’s lives. “We are aware that the pandemic has its ups and downs. We are living in a really complex moment where we have different mobility restrictions from state to state,” she said to MBN. “Our goal is to be the mobility platform that best adapts to what Mexicans need and that they can trust. Moreover, one of our commitments is to become a sustainable platform to set an

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example for the future,” said González. The ride-hailing giant aims to offer more integrated mobility solutions that could expand to public transportation, by bringing together all available options.

Sales & Mobility 82

What Is the Path Toward Sales Recovery?

The country has experienced historic lows in light-vehicle sales. With a 28 percent drop in year-on-year sales, the sector is learning to identify the elements that both dealerships and brands need to embrace to accelerate recovery. Partners from KPMG, Deloitte and IHS Markit address the transition toward digital channels, as well as the ever-present need to place customers as the No. 1 priority.

Transparency and visibility remain key for a sales recovery. An adequate flow of information between dealerships and brands should create greater levels of assertive communication to make demand visible. It is indeed an important moment to foster online sales and digitalization strategies. A customer-centered focus has, on the one hand, an important research element. On the other, it requires a more personalized experience through digital channels. Brands must understand their customers. We are at a time when customization is leading the way; a general focus is not enough anymore. It should all be about teamwork.

Manuel Nieblas Manufacturing Industry Leader Partner at Deloitte

Apart from the dealerships and OEMs, the government should also promote vehicle sales. Having said that, brands should be focused on the customer. The more dealerships and brands understand the customer, the faster their recovery will be.

Digitalization is also accelerating. The industry was aware that more and more users went online to research what they wanted even before going to the dealership. According to KPMG estimates, 30 percent of dealerships will disappear as we know them. That being said, it is not about changing one channel for another. Omnichannel is the way to go. A vehicle continues to be the second-most important purchase for a family, so the physical experience of a vehicle is also important for the sale. We are also seeing some innovations in this regard. KAVAK is the clearest example of a successful business where they send a car over

Oscar Silva Partner Leader of Global Strategy Group at KPMG

to your house for you to test it. Dealerships and brands should balance an immersive digital experience with a final physical interaction. An important element in this strategy is to make sure the experience goes smoothly for the user.

There will be ups and downs as we go through this recovery process. It is really important to highlight that our analysis is based on health concerns. Our assumption is that there will not be a major distribution of COVID-19 vaccine until 2H21 in the Northern Hemisphere. This means that significant inoculation will not happen until 2022. So, entering a regular consumption cycle similar to 2019 likely will not happen until 2H22 or 1H23. There are regions where the impact will be less, such as China, Australia, Japan and New Zealand, where governments have been more efficient in containing the pandemic. This does not mean we are not experiencing a stabilization process, as volatility has been

Guido Vildozo Main Partner at IHS Markit

fading considering the results of US vehicle demand.

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from the

Q: What were Uber México’s milestones in 2020?

A: I joined Uber México with the intention and commitment to deliver access to Uber to more and more Mexicans, both users and those looking for additional income through the platform. Soon after I arrived, we faced COVID-19 and the world changed toward finding solutions to protect the most vulnerable. In the very first moments of the crisis, we urged people to stay home. At the time, we transported food, medical staff, donors, and all people involved in dealing with this situation. At the global level, we provided 10 million free rides. We also used all of our technological capabilities to provide safe transportation for everyone. We initiated different campaigns, including “no mask, no ride,” which was easily implemented through technological features.

Q: What are Uber’s strategies to maintain its market leadership amid increasing competition?

A: Competition is always healthy. It makes us more creative regarding how we can deliver more value to our users and partners. We work toward being the most secure and accessible ride-hailing platform. Among our different options, we have Uber Promo, a functionality that allows us to offer 15 percent discounts at times when there is a low demand for rides. We are about to launch Uber Taxi in Colima, Durango, Manzanillo, Chihuahua, and Monterrey, and we are about to open the product to the rest of

Gretta González

the country. We also have Uber Moto in Cuernavaca, which is 40 percent below the cost of an UberX ride.

Q: The new tax reform has introduced new conditions for partner

General Manager of Shared Rides at Uber México

drivers and the company. How are you addressing this situation?

A: For us, taxation is really important. We abide by the authorities’ requirements and we keep in close communication with the government. New taxes are important because they impact our

Uber Mexico: Innovative, Smart, Efficient

partner drivers. In fact, the tax policy has helped them. Before, drivers were taxed between 2 and 8 percent depending on their income. Now, it is a 2.1 percent fixed rate regardless of income. This is a great motivator for partner drivers to continue working since their tax remains the same.

Q: What is your perspective on the future of mobility?

A: This is a question we ask ourselves every day. We are aware that the pandemic has its ups and downs. We are living in a really complex moment where we have different mobility restrictions from state to state. As a consequence, we at Uber are focusing on developing new alternatives that allow us to be where people need us the most. Moreover, we maintain our goals for sustainability and our commitment to our users and partners.

Q: What are Uber Mexico’s priorities for 2021?

A: Our top priority is to reach more Mexicans and to meaningfully contribute to sustainable mobility. The country continues to be one of the most relevant countries for Uber. We want to deliver accessible and secure mobility for everyone, reducing all obstacles

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to access the platform. while offering attractive profit schemes for partner drivers. We are also looking to integrate more women into the platform, having launched ‘Ellas’ (a feature that allows women drivers to receive only trips with women riders) first in 10 cities and as of January 20, we announced the expansion nationwide.

Conference

Sales & Mobility 84

Highlights

Disruption Spurs Mobility Transformation Raymundo Cavazos CEO of Volvo Car México

Juan Andrés Panamá CEO of Mexico and Argentina at DiDi

Anasofía Sánchez Director General at Waze LATAM

M

obility companies have had to get creative regarding their product portfolio, while providing safer services for their users. “This year brought significant opportunities to innovate,” said Juan Andrés Panamá, CEO of Mexico and Argentina at

DiDi, during Mexico Automotive Summit on Thursday, Mar. 25.

The world changed during 2020. “In Latin America we thought that we had seen everything. We were wrong,” said Raymundo Cavazos, CEO of Volvo Car México. In its early days, the pandemic brought Mexico to a near standstill as many began to work from home, non-essential businesses closed and people started to avoid leaving their homes to buy food and other necessities out of fear of coming in contact with the virus.

This meant a sharp reduction in mobility services. “Demand plummeted last year. In March and April, it fell by 50 percent,” said Panamá.

Traffic, one of the main annoyances of daily commuters, was also down. However, traffic is gradually coming back as lockdowns ease and vaccination programs advance. “Although there is less traffic now, do not be fooled. Traffic will return,” said Anasofía Sánchez, Director General at Waze LATAM. She reports that in 2020, Waze saw an 80 percent mobility drop in Mexico City.

However, it is slowly picking back up. “To this date we have seen an 80 percent recovery in traffic from its lowest point and we estimate that we are still 20 percent below pre-pandemic levels,” she said. Moreover, lockdowns seen in December did not hit mobility as hard as those in March 2020, Sánchez added.

While the world might slowly be going back to normal, the changes the pandemic brought are here to stay. One of these is the reevaluation of car ownership as consumers balance mobility as a service with an increased feeling of safety in their own vehicle. Traditionally, Mexican culture has favored car ownership. “We are one of the countries with less financial incentives for buying new cars but there is significant interest from the general public in acquiring one,” said Sanchez. Before the pandemic, however, mobility apps led younger generations to question whether they truly needed a car of their own.

“Ownership relevance is changing as Mexicans are now realizing they just need the service,” argued Cavazos. However, car ownership came into the spotlight again as users of public transportation or mobility apps questioned the safety of those

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services. “Cars are taking a new role during the pandemic as they give an unrivaled sense of security against other mobility options,” said Sánchez.

SPOTLIGHT

Sales & Mobility | 86

DiDi Mujer Supports Women Empowerment, Protection in Mexico In November 2020, DiDi Mexico launched DiDi Mujer, a feature that allows female drivers to accept requests only from female passengers.

DiDi Mujer was initially available in Mexico City, Puebla, Guadalajara, and Monterrey. Juan Andrés Panamá, DiDi’s General Manager in Mexico, said in a statement that this is the first time that a program like this has been launched in Latin America, except from Brazil. The Chinese firm has already launched similar programs in its home country, as well.

In 2020, more than 18,000 ride requests were made through DiDi Mujer’s feature on DiDi’s platform and in March 2021, the program reached national coverage. New female drivers signups increased by 28 percent and monthly income for female drivers increased 17 percent compared to March 2020.

DiDi is collaborating with the National Council for Prevention Against Discrimination (CONAPRED) in the development of a manual to establish protocols to prevent discrimination and gender violence. The company also signed a collaboration agreement with the Ministry of Security of the State of Mexico to connect with the state’s Control, Command, Communication, Computing and Quality Center (C5) to offer better protection for all who use DiDi’s platform.

According to the company, 64 percent of female drivers believe DiDi has supported them to achieve economic independence. For 83 percent of the women using the app, DiDi represents their main More about this company More about this topic

family income. In addition, almost 30 percent of the female drivers on the platform are the main income providers for their families.

Assurant: Consolidating Market Leadership Via Extended Warranties Felipe Sánchez President of Assurant Mexico

Livingston International: Partner to Comply with Trade Rules Rody Camacho / Benito Celorio Director of Trade Consulting Livingston International/Director of Trade Operations Livingston International

Getting Rid of Check-Payment Risks For Good Hugo González

Commercial Manager of Check Plus

Fleet Efficiency Through Centralized Software Evaristo Babé CEO of Pulpomatic

How Valuable Is the Aftermarket in Mexico? Óscar Balcázar Director for the America Region at GiPA

Case Study: How to Succeed in the Digital Aftermarket?

Leasing Equipment Can Save 20 Percent in Costs Simon Harrsen VP of Sales and Director in México of CHG Meridian

Specialization, Reliability, QuickResponse Are Keys for Success Ricardo Duhart Director of Strategy and Solutions for Companies and Government at BBVA

Engie Advancing Electric Mobility in Latin America Francisco Cabeza Electric Mobility Manager of ENGIE Latam

E•DRIVE, Busting Myths Regarding EV Infrastructure Rodrigo Centineo / Daniel López / Pedro Corral Founding Partner and Engineering Director of E•DRIVE/ Founding Partner and Marketing Director of E•DRIVE/ Founding Partner and Operations Director of E•DRIVE

Acronyms 3PLs

Third Party Logistics

GDP

Gross Domestic Product

ACES

Aftermarket Catalog Exchange Standard

GM

General Motors

AMAVE

INA

National Auto Parts Industry

Mexican Association of Vehicle Leasing Companies

INEGI

AMDA

National Institute of Statistics and Geography

Mexican Association of Automotive Distributors

ISO

AMIA

Intraconal Organization for Standardization

Mexican Association of the Automotive Industry

KPI

Key Performance Indicators

ANPACT

National Association of Bus Truck and Tractor Manufacturers

LVC

Labor Value Content

MBN

Mexico Business News

ARIDRA

National Association of Representatives Importers and Distributors of Auto Parts and Accessories

NAFTA

North American Free Trade Agreement

NOM

National Mexican Norm

BEV

Battery Electric Vehicles

OEM

Original Equipment Manufacturer

CASE

Connected Autonomous Shared and Electric

PEMEX

Mexican Petroleum Company

CLAUT

Nuevo Leon Automotive Cluster

PHEV

Plug-in Hybrid and Electric Vehicles

CLAUGTO

Guanajuato Automotive Cluster

PIES

Product Information Exchange Standard

CLAUZ

Automotive Cluster PueblaTlaxcala Region

R&D

Research and development

CONACYT

National Council for Science and Technology

ROI

Return of Investment

RVC

Regional Value Content

EPA

United States Environmental Protection Agency

SME

Small and Medium sized Enterprise

ERP

Enterprise Resource Planning

SUV

Sport Utility Vehicle

EV

Electric Vehicles

USMCA

United States-MexicoCanada Agreement

FCA

Fiat Chrysler Automobiles

VAT

Value Added Tax

FDI

Foreign Direct Investment

Advertising Index Lavartex 1

WTC Industrial 47

HSBC 5

MLD 56

Mazda 14

Evonik 62

Ergotron 21

3M 64

ARIDRA 23

GalantisPLUS 68

Alian Plastics 27

SURMAN 75

CarFast 34

TIP 80

Universal Robots 38

MexicoView 85

ANPACT 43

Index ABB 60, 66

Deloitte 15, 25, 82

AIA Canada 17

DiDi 69, 84, 86, 91

Alliance of Automotive Innovation 17

DINA 26, 39, 42, 45

Alian Plastics 27, 48, 53, 22

Eaton 66

AMAVE 69, 78, 79, 80

E•DRIVE 37, 87

Amazon 63

ENGIE Latam 87

AMDA 6, 63, 7, 70, 10, 73, 15, 81

Evonik 48, 54

American Industries 49

Faurecia 48, 51, 52

AMIA 6, 7, 8, 17

FCA 7

ANPACT 6, 11, 39, 11

Fiat 29

Aqua Machinery 66

Ford 26, 29, 31, 33, 70

ARIDRA 6, 7, 12, 24

Freightliner 26, 39, 67

Assurant 87

GarantiPlus 69, 71, 76

Audi 29, 7, 53

GiPA 87

Automotive Cluster of San Luis Potosi 18

Giant Motors 36

Automotive Cluster of the State of Mexico 19, 45

Global Automakers Canada 15, 17, 91

AXA Mexico 69, 77

GM 26, 29, 55, 56, 67, 70

BAIC 45

Hino 39, 67

BBVA 87

Holland House Mexico 25

Bechem Lubrication Tecnology 66

HSBC 88

Blue Yonder 60, 66

Hyundai 28, 30, 70

BMW 26, 29, 7, 53, 15

IHS Markit 12, 15, 17, 29, 82, 89, 91

Bocar Group 48, 50

INA 9

Check Plus 87

Infiniti 45

CHG Meridian 87

International 26, 39, 87

Chihuahua Automotive Cluster 18, 25

Isuzu 39, 67, 70

Chrysler 26, 29, 70

JAC 7, 29

CLAUGTO 19

Jaguar Land Rover 28, 37, 38, 45, 81

CLAUT 6, 20, 22, 25

Jalisco Automotive Cluster 15, 19, 25

CLAUZ 19, 65

Jalisco State Government 36

Daimler 28, 40, 42, 44, 45, 65

Kavak 67, 72, 74

Index Kayser 66

Queretaro Automotive Cluster 18, 25

Kenworth 26, 39, 67, 70

Renault 32, 70

Kia 26, 29, 67, 7, 70

Ripipsa 66

KPMG 29, 49, 82

Scania 28, 39, 41, 44, 45, 65

Laser & Manufacturing 66

Siemens 51

Lavartex 88

Stellantis 7

Livingston International 87

Surman 69, 71, 74, 75

Man Truck and Bus México 39, 44

Suzuki 70

Metalsa 22

TIP México 69, 79

Mazda 6, 7, 13, 14

Toyota 28, 29, 31, 36, 46, 59, 7, 70, 14, 15

Mercado Libre 12, 56, 63, 69, 71, 73, 74, 81

Uber 31, 69, 81, 83

Mercedes-Benz Autobuses 26, 39

Universal Robots 51, 88

Minister of Economic Development of Jalisco 36

Volkswagen 26, 36, 39, 58, 67, 70, 81

Mitsubishi 28, 32, 48, 61, 62, 71

Volkswagen Camiones y Autobuses 26, 39

Mitsubishi Electric Automation 48, 61

Volvo Buses 39, 42

MLD 48, 55

Volvo Car México 84

Monsalvo Duclaud 65

VUHL 28, 35, 45

Nissan 26, 29, 32, 67, 70

Waze 84

NSK 66

Wizlynx group 25

OMRON 60

Yanfeng 48, 59

Pfeiffer Vacuum 66

Zacua 28, 33, 34, 36

PSA 7

Zanini Auto Group 48, 58

Pulpomatic 87

ZF Services 48, 63

Quaker State 69

Photo Credits 4

46

Audi AG

8 AMIA

50

Bocar Group

9 INA

51 MBP

10 AMDA

52

11 ANPACT

53 MBP

12 ARIDRA

54 Evonik

13 MAZDA

55 ARIDRA

16

58

Zanini Auto Group México

17 MBP

59

Yanfeng Automotive Interiors

18

60

OMRON, ABB México, Blue Yonder

Automotive Cluster

61

Mitsubishi Electric Automation México

CLAUGTO, Jalisco Automotive Cluster,

63

ZF Services

Audi AG

Global Automakers Canada

Automotive Cluster of San Luis Potos,

Faurecia México

Queretaro Automotive Cluster, Chihuahua

19

Automotive Cluster of the State of Mexico, CLAUZ

65 MBP

20 CLAUT

66

AUDI AG

22 MBP

67

BMW AG

24 GM

71 MBP

25

Audi AG

72 KAVAK

26

Volkswgen AG

73

30

Hyundai Motors de México

74 Surman

31

Toyota Motor de México

76 GarantiPlus

32

Mitsubishi Motors de México

77

Mercado Libre

AXA México

33 Zacua

78 AMAVE

35 VUHL

79

TIP México

36 MBP

82

Deloitte, KPMG, IHS Markit

37

Jaguar Land Rover Mexico

83

Uber México

40

Daimler México

84 MBP

41

Scania México

86

42

Volvo Buses, DINA, Daimler México

87 Mazda

44 MBP 45

Audi AG

DiDi México

90 Audi

Credits Journalist & Industry Analyst: Alejandro Enríquez Journalist & Industry Analyst: Andrea Villar Senior Editor: Mario Di Simine Senior Writer: Alicia Arizpe Senior Editorial Manager: Alejandro Salas Publication Coordinator: Franco Zúñiga Publication Coordinator: Rodolfo Velez Graphic Designer: Tania Aguiñiga Graphic Designer: Marcela Muñoz Ledo Senior Graphic Designer: Mónica López Design Director: Marcos González Web Development: Omar Sánchez Collaborator: Miriam Bello Collaborator: Cas Biekmann Circulation Manager: Constanza Blanco Director General: Jeroen Posma

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