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Customer LoginsMexican light-vehicle sales, production decline in April 2018
Mexico's light-vehicle sales are continuing 2017's downward trend, with a 4.6% y/y decline in April, according to AMIA. Production and exports in April were up only 0.3% each.
- Implications: Following a decline in light-vehicle sales in 2017, the first four months of 2018 have continued this trend. April sales dropped 4.6% y/y. Light-vehicle production is about even with the first four months of 2017, including in April, as well as exports.
- Outlook: IHS Markit forecasts sales in 2018 will decrease by 5.2%, to 1.45 million units. Consumers face higher inflation, higher gasoline prices, and tensions regarding the future of NAFTA negotiations, all feeding into the volatility of the Mexican peso against other currencies and inflation. Additionally, OEMs reduced incentives as currency devaluation eroded profitability. Lastly, financing rates have also crept up, resulting in a tougher environment to lend in. The political impact of the mid-2018 presidential election may also bench consumers until some degree of clarity is in sight.
IHS Markit perspective
April 2018 light-vehicle (LV) sales in Mexico continue the downward trend, according to data from the Mexican Automotive Industry Association (Asociación Mexicana de La Industria Automotriz: AMIA), down 4.6%, lower than February or March 2018 declines. In the year to date (YTD), the market is down 9.4%. Mexican light-vehicle sales in 2018 have continued to be soft. LV sales growth in Mexico is different from the trends in other global regions, as the market is not showing as drastic a swing to sport utility vehicles (SUVs) from passenger cars, according to data through March 2018, as AMIA did not report on the split for April 2018. Through March, passenger car sales were declining and LCV sales improving. In 2017, passenger car sales were down by 7.7% compared with 2016 while LCV sales gained 1.6%. In the first quarter of 2018, sales of passenger cars are down 15.6% while LCVs are down a modest 1.5%. Passenger cars in March 2018 accounted for 63.1% of sales, compared with 70% in March 2017.
IHS Markit forecasts sales in 2018 will decrease by 5.2% y/y to 1.45 million units. In 2018, consumers face higher inflation, higher gasoline prices, and tensions regarding the future of NAFTA negotiations, all feeding into the volatility of the Mexican peso against other currencies and inflation. Additionally, OEMs reduced incentives as currency devaluation eroded profitability. Lastly, financing rates have also crept up, resulting in a tougher environment to lend in. The political impact of the mid-2018 presidential election may also bench consumers until some degree of clarity is in sight. Further out, IHS Markit projects a moderate pace of growth to become the trend, with increases between 2.8% and 1.8% through 2025. Investment in LV production continues to come online, and the market is forecast to see output remain above 4.0 million units for most of the forecast period, with some contraction in the medium term.
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The above article is an excerpt from AutoIntelligence Daily by IHS Markit. AutoIntelligence Daily provides same-day analysis of automotive news, events and trends. Get a free trial and read the full article.