Mexican Automotive Industry:

an Outlook towards 2020

Eduardo J. Solís SánchezPresident

Mexican AutomotiveIndustry Association

October 9, 2015El Paso, Texas

Automotive SectorEconomic Relevance:

2

Top generator of foreign reserves. With a foreign trade surplus of 49.7 billion dollars

in 2014

25% of manufacturing exports

Mexico has become the 7th

largest manufacturer of vehicles, during 2014, and

the 1st in Latin America

4th largest exporter in the world

5h largest automotive parts exporter and first supplier for

the United States

Production and Exports

– Contributed with 3.7% of total world production.– More than 80% of total production is directed to foreign markets.

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

jan-

sep

2014

jan-

sep

2015

Mill

ion

uini

ts

Light vehicle production

0.00

0.50

1.00

1.50

2.00

2.50

3.00

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

jan‐sep 2014

jan‐sep 2015

Millionun

its

Light vehicle exports

Δ+

6.7%

Source: AMIA. 3

Δ+

6.5%

Automotive trade surplus in Mexico• In the first seven months of 2015, automotive

trade surplus reached 31.1 billion dollars.

Fuente: elaborado por AMIA con datos del Grupo de Trabajo de Estadísticas de Comercio Exterior, integrado por el Banco de México, INEGI, Servicio de Administración Tributaria y la Secretaría de Economía.* Automotriz incluye: 870120 – Tractores de carretera para semirremolques; 8702 - Vehículos automóviles para el transporte => 10 personas; 8703 -Automóviles tipo turismo; 8704 - Vehículos para transporte de mercancías; 8706 - Chasises con motor; 8707 - Carrocerías; 8708 - Partes y accesorios de vehículos; y 8711 - Motocicletas.

5,26

5

5,25

8

8,19

8

9,41

6

8,45

9

9,35

5

11,4

31

10,9

74

10,8

41

9,61

7

10,3

23

9,97

8

10,0

45

14,4

64

15,2

11

16,4

60

15,2

86

26,9

11

34,0

71

37,5

04

43,4

53

49,6

56

27,1

77

31,0

72

-

10,000

20,000

30,000

40,000

50,000

60,000

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

jan-

jul 2

014

jan-

jul 2

015

Mill

ion

dolla

rs

Automotive Trade*

843%Δ+

14.3%

4

Automotive Industry* is a keyforeign reserves generator in Mexico

5

Fuente: elaborado por AMIA, con datos de INEGI - Grupo de Trabajo de Estadísticas de Comercio Exterior, integrado por el Banco de México, INEGI, Servicio de Administración Tributaria y la Secretaría de Economía.* Se considera Industria Automotriz: 87.01.20 Tractores de carretera para semirremolques; 87.02 Vehículos automóviles para el transporte => 10 personas; 87.03 Automóviles tipo turismo; 87.04 Vehículos para transporte de mercancías; 87.05 Automóviles para usos especiales; 87.06 Chasises con motor; 87.07 Carrocerías ; 87.08 Partes y accesorios de vehículos; 87.11 Motocicletas

51,506

15,000

14,311

10,721

0

10,000

20,000

30,000

40,000

50,000

60,000

jan-jul 2012 jan-jul 2013 jan-jul 2014 jan-jul 2015

Mill

ion

dolla

rs

Dollars income to Mexico

Automotive Exports Oil products Exports

Remittances Income Tourism Income

In the period January to July, automotive exports were 3.4 times oil products exports, 3.6 times remittances income and 4.8 times tourism income.

Light vehicles and engines production in Mexico

6

Railway Sistem

Source: Secretaría de Comunicaciones y Transportes. 7

8Source: Secretaría de Comunicaciones y Transportes.

Vehicles trade throughmaritime ports (January-August 2015) Export Import

355,213vehicles

70,527vehicles

51,576vehicles

31,425vehicles

169,485vehicles

168149vehicles

National Ports System

7,436517

NAFTAVehicle Production

9Source: AMIA with data of Ward’s Automotive and OICA. Data in vehicle units.

• From 1994 to 2014 production vehicle of NAFTA region increased 11.1%.

Canada15%(2.32

million)

United States78%(12.24 million)

Mexico7%

(1.12 million)

1994

NAFTA: 15.68 million vehicles.

Canada14%(2.39

million)

United States67%(11.66million)

Mexico19%(3.37

million)

2014

NAFTA: 16.48 million vehicles.

Why do OEM’s decide to invest in Mexico?

10

5 major elements that makeMexico attractive for new investments

…and very important: the Government is a major partner to help land investments.

11

Geographic Location

Trade agreements network with major regions

around the world

Strength of the

automotive supply chain.

Young and eager to learn

human resources

(technicians and engineers)

Economic Stability

Announced investments

12

ANNOUNCEMENT COMPANY ANNOUNCED INVESTMENTS DESTINADO A

2012 AUDI 1,300 mdd Assembly plant – Puebla

2014 NISSAN-DAIMLER 1,360 mdd Assembly plant – Aguascalientes

2014 BMW 1,000 mdd Assembly plant – San Luis Potosí

2014 KIA MOTORS 1,000 mdd Assembly plant – Nuevo León

2014 GM 5,000 mdd Expansion

2015 VW 1,000 mdd Expansion

2015 TOYOTA 1,000 mdd Assembly plant – Guanajuato

2015 FORD1,100 mdd Engines assembly plant – Chihuahua

200 mdd Expansion1,200 mdd Transmissions assembly plant– Guanajuato

Source: recopilación de publicaciones periodísticas, boletines de prensa de las empresas y boletines de la Secretaría de Economía..

According to the Ministry of Economy, the Automotiveindustry attracted 39,319.3 million dollars during 1999 – IIt2015 of Foreign Direct Investment, the industry represented9.7% of total FDI in Mexico.

Light vehicles productionand forecast 2020

13Fuente: 2000 a 2014 registro de AMIA. 2015^ a 2020^ corresponde a estimación de la asociación suponiendo una tasa de crecimiento del 3% y con base en los anuncios publicados.

1.9 1.8 1.81.5 1.5 1.6

2.0 2.0 2.1

1.5

2.32.6

2.9 2.93.2

3.4

4.04.2

4.6

5.15.3

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

^

2016

^

2017

^

2018

^

2019

^

2020

^

Milli

onun

its

Hard data of last 20 years in North America:

– Mexico increased 12% its North American productionshare during the last 20 years.

– United States and Canada decreased 11% and 1%,during this period.

14

… 2020

– Considering new investments, our forecast is that Mexicowill be producing more than 5 million vehicles in 2020.

– 27% of NAFTA production, if United States and Canadamaintain the same production level of 2014.

Human resources and investigation

15

Total graduates in the areas of engineering,manufacturing and construction

16Fuente: PROMEXICO with information from UNESCO.

Automotive Industry Group ofUniversities and Research Centers

17Source: AMIA.

1. Human resources

2. Linkage programs

3. Infrastructure

4. Collaborative projects

5. Government incentives

6. Legislative agenda

¡ T H A N K Y O U !Eduardo J. Solís Sánchez

PresidentMexican Automotive Industry Association

(55) 5272-1144esolis@amia.com.mx

18

@AmiaMexico

Asociación Mexicana de laIndustria Automotriz ac