Exports stop the impact of the ‘superweight’ for automotive companies – El Financiero

“Yes, we are observing how it has been decelerating the price of vehicles in Mexico, from the maximum point reached in the first quarter of 2022, in which they increased 9.3 percent at an annual rate,” he said.

Rosales added that, in contrast, A falling exchange rate does affect the income of some companiesespecially in auto parts where you can feel it directly.

However, he insisted that until now important impacts on production and export have been ruled outdue to strong demand from the United States.

“What is known is that a falling exchange rate, as for any exporter, has a negative impact. In the case of the automotive industry, 90 percent of the production volume of both auto parts and vehicles is destined for export and in this case exporters have seen their income decrease,” he declared.

Last year the peso registered a historic appreciation against the dollar of 13 percent. Until the third week of April 2024, The local currency was affected by the escalation of the conflict in the middle easthowever, It remains at a value of 17.1 units per dollar.

Competitiveness at risk?

David Camposecodirector of asset allocation at Principal, explained that The behavior of the peso has been the result of a very important differential in terms of interest rates with the USwhich has become a good business for international investors.

He highlighted that the costs due to the effects of the exchange rate are very low due to the integration of value chains. In that sense, he assured that The industry has been shielded in recent years, howeverin a scenario of long-term peso depreciation, He said the country’s competitiveness could be affected.

“Now, in the medium and long term, if the peso were to remain at these levels or cheaper, it could discourage future investments. “If you are thinking about opening an automotive plant somewhere in the world, Mexico is on the less competitive side due to the exchange rate,” he said.

The effects of ‘superweight’ on the industry have impacted the costs of raw materials and operations, commented Sergio Argüelles, general director of Finsa.

“The exchange rate affects us in raw materials, construction is more expensive, the same companies greatly promote Mexico’s competitiveness within export prices and that has been affected by the strong peso, has reduced the competitiveness of our exports by 10 percent”, he concluded.