ASSESSMENTS

Latin America's Auto Giants Strive to Secure Markets

Nov 12, 2018 | 11:00 GMT

New Peugeot and Citroen cars await shipment on the pier in Rio de Janeiro, Brazil, in February 2017.

New Peugeot and Citroen cars await shipment on the pier in Rio de Janeiro in February 2017. Brazil's auto sector is aiming to expand beyond its domestic market, while its counterparts in Mexico have secured continued access to the massive U.S. market.

(DENYS YELMANOV/Shutterstock)

Highlights

Mexico's auto sector will remain oriented toward the United States, particularly in the wake of the signing of the United States-Mexico-Canada Agreement.
Brazil will continue its quest to find new export markets, as Mexico did three decades ago.
Brazil's incoming administration will try to persuade members of the Mercosur trading bloc to allow each member state to sign its own bilateral free trade agreements.
If Brazil succeeds in lifting Mercosur's trade restrictions, the country's auto sector will target developing markets in Asia, Latin America and Africa, where Brazilian-made vehicles would be most competitive.

When it comes to Latin American automotive production, two giants dominate the scene: Mexico and Brazil. Together, they produced 6.8 million light and commercial vehicles last year, representing around 7 percent of the globe's total output. The two countries are also heavily integrated into global automotive supply chains, as Mexico's auto sector is closely linked to the United States, while Brazil's auto sector has tight connections to Argentina. Historically, however, the Mexican and Brazilian automotive industries developed in vastly different geopolitical environments. Mexico is an export-oriented powerhouse, shipping nearly 70 percent of its finished vehicle production to the United States. Brazil, on the other hand, mainly focuses on supplying its huge domestic market. And thanks to the new United States-Mexico-Canada Agreement, the future of Mexico's automotive market clearly lies in the same place as its recent past: the U.S. domestic market. Brazil, by contrast, will take steps to eliminate the...

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