Mexico contending with Argentina for automotive leadership in Brazil, learn more about it here. Follow The Qualified Group Insights section for more articles.
México is about to displace Argentina as the main automobiles exporter to Brazil, a country that has set restrictions on Mexican supplies precisely due to dynamism shown in this sector.
Between January and July, Argentina was the first automobiles supplier in Brazil’s market with sales for US$1.919 billion, a year-to-year drop of 19.1%, according to data from the Brazilian government. On the other hand, Mexico exported US$1.747 billion with a contrasting 108% increase over even term a year before.
All other big competitors were left behind; South Korea with US$852 million and a 38.3% drop and Germany with US$346 million.
“In the last few years Mexico has set a very strong position in the global automotive sector, due to low production costs, high quality and a renewed offer of vehicles, which provides for a stronger drive in markets such as Brazil’s and Argentina’s” Maximiliano Scarlan, Analyst with Abeceb Consultants Firm, said.
In the first 7 months of 2012 Brazil imported automobiles for US$5.647 billion, a 9.7% year-to-year drop. Brazilian assemblers have lost competitiveness to Mexico’s in the last few years; however, when taking into consideration trade balances from 2003 to 2011, Brazil posted an accrued surplus of US$10.412 billion in the automotive sector.
Brazil asked Mexico to suspend for 3 years automobiles free trade and set quotas for US$1.450 billion in the first year, which ends on March 2013, and for US$1.560 billion and US$1.640 billion for the second and third years, respectively.
Mexico’s productivity in this industry is shown by data available. In July 2012, Mexican automobile exports to Brazil added to US$277 milion, a 133% increase, while Argentina’s summed US$291 million, a 29% drop.
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