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Roundup: Mexico's booming auto sector helps strengthen export competitiveness

Xinhua, January 21, 2016 Adjust font size:

Mexico's auto industry strived in 2015, making the country the biggest auto manufacturer in Latin America while strengthening its overseas competitiveness, especially in the United States.

Mexico produced 3.99 million vehicles in 2015, 5.6 percent more than last year, according to statistics from the Mexican Auto Industry Association (AMIA).

Its vehicle exports totaled 2.76 million units, with an increase of 4.40 percent compared to last year. The U.S. is the leading market for Mexico's automobile exports, constituting 72.80 percent of the total, a 6.30-percent increase over 2014.

Mexico's automotive industry has overtaken oil exports in attracting foreign funds, according to the Mexican Chamber of Deputies' Center for Studies in Public Sector Finance (CEFP).

The industry's growth is also reflected by increases in foreign direct investment (FDI). Between 1999 and the second quarter of 2015, the industry attracted 39.319 billion U.S. dollars, or 9.70 percent of all FDI, according to the CEFP.

In terms of exports, the automobile sector enjoys certain advantages, including Mexico's geographic location to the U.S., cheap labor and free-trade agreements.P Emerging manufacturing businesses stress the free-trade agreements as "an important factor in their decision to begin production in Mexico," said Carlos Capistran, a chief Mexican economist at Bank of America Merrill Lynch, in a recent report published on Mexico's English-language newspaper The News.

"Mexico should remain competitive in the U.S. market despite the rise of China," mainly due to such factors as "devaluation of the peso, low consumable costs and structural reforms," said Capistran.

One of Mexico's biggest advantages, said the economist, is its floating exchange rate.

The Mexican peso has devalued by some 20 percent since late 2015, currently standing at just under 20 pesos to the U.S. dollar.

While the U.S. "has been importing more from China in recent years, this has not been to the detriment of Mexico, which has also benefited from larger exports to its neighbor to the north," the newspaper said, citing Capistran. Endi