Jose Ruiz

The manufacturing sector in Mexico is slowly getting stronger. Industrial production increased by 1.6% in December for the first time since 2008 fueled in great part by an increase in demand led by the U.S. which accounts for approximately 80% of manufacturing exports.

It is no surprise that the increase coincides with an improvement in the automotive industry that accounts for approximately 21% of Mexico’s total exports. In an interview with Bloomberg Ana Ruth Solano, the Economy Ministry official who oversees the automotive industry is predicting a 20% rise this year as local and U.S. demand rebounds after the great recession.

A big part of that increase might be coming from small cars. There is an increased appetite for smaller cars in the U.S and many of the car manufacturers are banking on the segment to help them through the next few years.  Mexico has been strong in the segment for many years and is well positioned to bank on the trend.  A large part of existing capacity is already focused on small cars and auto companies such as Fiat continue to invest.  Fiat Chief Executive Sergio Marchionne recently announced a 550M investment to produce up to 130,000 Fiat 500’s a year out of the Chrysler’s Toluca plant.

Solano also mentioned that Nissan is planning an investment to produce small cars, and may choose Mexico, but no announcement on the location has been made.

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