Top 10 opportunities in

the Automotive and Auto

parts industries in

Mexico

…AND HOW TO START SERVING T HOSE CL IENTS FROM A COST COMPETITIVE LOCATION

About American Industries Group

American Industries Group has helped over 200 global companies to successfully start up and grow distribution and

manufacturing operations throughout Mexico since 1976 through Site Selection, Incubator Programs, Administrative “Shelter”

services and Industrial Real Estate.

ReynosaMonterreyGómez Palacio & Torreon

Camargo

El Paso

Gómez FariasChihuahua

San Luis Potosi

México D.F.

Juárez

Querétaro

Delicias

León

Monclova

Guadalajara

Saltillo

Regional Offices, Incubator Locations

Shelter and/or Real Estate Customers

SilaoLocations where we serve our clients in Mexico

Real EstateWe have built over 12 M Sq. Ft. Portfolio in

the most important industrial regions throughout Mexico

Shelter & Start-up Services• 53 Customers currently served• Over 11,700 Customer’s headcount• Over 30,000 trouble-free import and export

transactions per year

How we help companies to succeed in Mexico!

We are present at all stages of your industrial business needs in Mexico:

We help you find the right location for

your operations in Mexico including the

coordination of business agendas in

different regions.

Site Selection

Start up under an Incubator

Shelter Program

Expansion in other regions in Mexico

Supply Chain / Divisions Relocation

We take care of all start up, legal, operational and environmental permits,

human resources, customs, logistics, fiscal,

accounting and all the administrative part of the

business.

We help you grow your business by working

together with industrial clusters and

associations to promote your business in

different regions in Mexico. We help you to educate

and relocate your foreign suppliers or other divisions near your

operations in Mexico.

Contents

� Automotive and Auto parts indicators and trends in Mexico

� Top 10 Automotive OEMs and their production forecast

� Top 10 Auto parts currently needed to support imports and

exports in Mexico

� Mexico’s Industrial Incubator Program

Automotive and Auto parts indicators and trends in Mexico

Production of vehicles in the World, 1997-2013

Mil

lio

nU

nit

s

Annual average rate of growth , 2013-2020

Global Markets 3.8%

Developing Markets 5.8%

Developed Markets 1.5%

58

% D

eve

lop

ing

Ma

rke

tsin

2

02

0

Other

Southeast

Asian Nations

South

America

India

Eastern

Europe

China

Japan and

Korea

Western

Europe

North

America

Source: IHS Global Insight

Production Export/Domestic Market Ratio

Mexico exports up to 81.7% of its vehicle production output, therefore it becomes important tounderstand its free trade agreements network.

88.5%

77.6%

88.7%

73%

87.2%

81.7%

13.9%

17.2%

70.7%

82.5%

52.1%

19.1%

4.7%

0 5,000,000 10,000,000 15,000,000 20,000,000

Czech R.

UK

Spain

France

Canada

Mexico

Brazil

India

South Korea

Germany

Japan

USA

China

Un

its

Domestic

Exports

Source: ProMexico with information from OICA, Global Trade Atlas, ANFAVEA, AMIA and CAAM

In 2015 Mexico will offer savings of 16 % with regard to the manufacturing costs in USA, while China will have reduced

its advantage in costs (considering “Total Landed Cost” to USA)*

Source: data and forecast of Alix Partners (Manufacturing Outsourcing Cost Index)

Share of the cost in USA

Mexico

India

China

USA

0.60

0.65

0.70

0.75

0.80

0.85

0.90

0.95

1.00

1.05

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

Advantages in costs of manufacturing and transportation

*Total Landed Cost to USA includes manufacturing and transportation costs to USA

Foreign Direct Investment and Free Trade Agreements

After the enactment of the North America Free Trade Agreement (NAFTA), Foreign Direct Investment

amounted more than 36 billion dollars.

Foreign Direct Investment in

Automotive Sector(million dollars)

Source: Kasso & Asociados with data from Mexican Ministry of Economy and Mexican Central Bank

North AmericaUSA and Canada

Triangle of the NorthHonduras, El Salvador and Guatemala

Japan

European Union

European association of Free tradeIceland, Liechtenstein, Norway and Switzerland

Pacific Alliance

Colombia

Chile

Peru

Mexico

Mexico’s Free Trade Agreements with access to 45 countries

*From 1997- 2012 data from AMIA for Mexico and OICA for USA and Canada. From 2013- 2019 forecast

from IHS Global Insight.

Source: INA with information from AMIA, IHS Global Insight and OICA

Light Vehicle Production in NAFTA Region

USA 65%

Canada 11%

Mexico 24%

NAFTA = 17.9 Million units

Millio

nu

nit

s

Production of light vehicles in Mexico 2002-2019

Source: INA with information from AMIA

+ 47%

Balance Trade of Automotive Sector in Mexico

During 2013, balance trade of automotive sector reached a surplus of 38,774 million dollars.

Source: Mexican Central Bank (BANXICO).* Automotive includes: 8702 - motor vehicles for the transport => 10 people; 8703 - tourism cars; 8704 - vehicles for transportation of goods; 8706 - Chasises with engine;

8707 - Bodies; 8708 - vehicle parts and accessories; and 8711 - motorcycles.

5,3

33

5,3

15

8,2

16

9,4

36

8,4

99

9,3

08

10

,55

4

10

,97

0

10

,90

6

9,0

88

9,8

02

8,8

44

9,0

89

13

,33

0

14

,41

1

15

,34

6

13

,20

2

23

,76

0

28

,91

7

32

,24

4

38

,77

4

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

Mil

lio

nd

oll

ars

Balance Trade of Automotive Sector in Mexico

Production and exports of heavy vehicles in Mexico, 2000-2013

Source: ANPACT

+ 60%

Auto Parts Production and Forecast

Source: INA with information from INEGI, AMIA and IHS Global Insight

Auto Parts Production per State, 2016 (includes engines and transmissions)

Source: INA with information from INEGI

Bajío Zone

26%

Bajío Zone

26%

Source: INA with information from INEGI

Auto Parts Production per State, 2013 (includes engines and transmissions)

18.2%

14.2%

10.5%

3.6%

5.7%

6.5%7.3%

� Guanajuato

� Queretaro

� San Luis Potosi

� Aguascalientes

� Jalisco

� Guanajuato

� Queretaro

� San Luis Potosi

� Aguascalientes

� Jalisco

� Baja California

� Sonora

� Chihuahua

� Coahuila

� Nuevo Leon

� Tamaulipas

� Baja California

� Sonora

� Chihuahua

� Coahuila

� Nuevo Leon

� Tamaulipas

Automotive Industry in Mexico

Are you ready to start

providing your products and

services to any or some of

these supply chains?

This map shows the location of the light vehicles and heavy duty industry OEMs established throughout Mexico where morethan 400 supplier companies are expected to be fully operational before 2020 transforming Mexico in the 3rd exporter of lightvehicles at an international level.

Automotive Clusters and Supply Chain Integration

When will you start the distribution or

even manufacturing operations of your core business in those automotive

clusters?

This is a sample of an automotive regional cluster in Mexico, where the different OEMs integrate different suppliers toassemble and export their units to other countries. In order to keep growing, this cluster needs key suppliers in forging,casting, machining, plastic injection molding and tooling, among plenty of services to integrate and finish those products.The same is happening in other automotive clusters throughout Mexico.

Top 10 Automotive OEMs and their production forecastARE YOU READY TO TAKE YOUR PIECE OF THIS GROWTH?

Forecast of Light Vehicle Production in Mexico, 2014-2019

Source: INA with information from IHS Global Insight

Forecast of production of light vehicles in Mexico, 2014-2019 (units)

OEM 2014 2015 2016 2017 2018 2019Nissan 643,686 683,770 762,841 884,158 922,294 939,069General Motors 670,988 670,185 621,438 760,621 786,997 781,662Volkswagen 537,840 554,204 603,346 617,047 611,667 649,607Chrysler 375,373 417,947 586,641 544,818 562,147 555,425Ford 471,551 456,968 432,410 355,867 442,292 530,676Honda 170,722 251,950 279,427 322,326 321,022 318,748Mazda 89,696 178,972 200,129 253,245 257,192 236,283Toyota 54,682 71,557 154,723 160,235 168,589 164,398Audi 0 0 72,503 131,270 155,300 149,837Fiat 90,160 67,014 24,366 0 0 0

Total 3,104,698 3,352,567 3,737,824 4,029,587 4,227,500 4,325,705

Additionally,

BMW and KIA

MOTORS will

be adding

their

production

forecast

starting from

2016!

Light Vehicle Sales in Mexico per OEM

Source: INA with information from AMIA

Total 1,099.9

Total 611.2

Total 754.9

Total 820.4

Total 905.9

Total 1,063.3

Main OEM’s and Tier One Supplier with Design Engineering Centers in Mexico

Enterprise Number of Engineers

FORD 800

Chrysler 500

General Motors 600

Volkswagen 600

Nissan 700

Delphi 1,500

Continental 700

Faurecia 300

Top 10 auto parts needed in Mexico to support imports and exportsARE YOU READY TO TAKE YOUR PIECE OF THIS GROWTH?

Mexico’s Industrial Incubator Program

DESIGNED TO MAKE IT EASY FOR YOUR COMPANY TO START BUSINESSOPERATIONS TO SERVE THE AUTOMOTIVE OR AUTO PARTS INDUSTRY INMEXICO.

Mexico’s Industrial Incubator Program: what it is

It is a program that got specially designed for companies that have no previous experience in doing business different regions

throughout Mexico.

When you sign up for this program, you will get all the

privileges, benefits and incentives as if you were already

an expert in doing business in Mexico with a large and

mature operation.

Take this opportunity as a new competitive edge for your

company where you will be conquering new markets with

a very unique advantage: being able to focus on your

clients and production!

What are the benefits that you will get?

Mexico’s Industrial Incubator Program: Benefits

You will get assistance with:

�B2B meetings and business agenda coordination with aerospace,

automotive and metal mechanic clusters to help you promote your

products and services.

�Real estate space: starting from 5,000 Sq Ft

� Freedom to start doing business in Mexico without a Legal Entity!

� Legal and operational permits: fast start up in 9 weeks

�Human resources: we will help you find and recruit your sales, distribution

and operations staff (starting from 5 employees).

�Government incentives negotiation on technical training.

� Customs: we will help you get the maximum tariffs savings from the free

trade agreements with 45 countries for your imports and exports.

� Fiscal and accounting management +

� NO INCOME TAX for the first 4 years

� NO VAT effect on cash flow

�NO Start up or Exit FEEs

�NO risks: no legal or administrative liabilities

� Starting at an estimated fully loaded cost per hour of $18 USD per

employee including labor, logistics, real estate and utilities.

Mexico’s Industrial Incubator Program: Stages

The incubator program will help you to take your first steps in Mexico entirely focused on sales, customer service andproduction and you will not face any legal or administrative risks or liabilities on your start up stage.

Request your Incubator

Application

� You will get a tailored evaluation and roadmap to start operations in the regions that there might be potential for yourbusiness to grow in Mexico.

� You will get a tailored cost model where you will be able to compare the total cost of production per hour in each region.

Get a Business Agenda in

Mexico

Start up (9 weeks)

� At this point we will coordinate business agendas in the selected regions for your operations in Mexico with industrialassociations and clusters.

� As part of the agenda, you will be able to visit the Incubator’s real estate facilities where you will be able to operate.� Additionally, you will get a presentation of the different enabling services that you will get as part of the Incubator and

you will be able to meet with government officials.

� At this stage you will get all permits for your operations. � You will get your human resources hired and organized (including payroll management). � You will get your machinery and equipment installed. � You will get all your customs & logistics set up. � You will get all paperwork and administrative tasks done so that you can start serving your clients from your new location.

Sharing Responsibilities under the Incubator Program

•Management to direct operations.

• Machinery & equipment.

• Raw materials.

• Full control over distribution,

production and quality.

Manufacturing

Maintenance

Your Company American Industries

Engineering

Design

Quality

Scheduling

Raw Materials

InventoryManagement

PurchasingDirect Mat

PurchasingIndirect Mat

Import & Export

Customs

Duties Optimization

Logistics

Operational Permits

Accounting

Fiscal

Accounts Payables& Receivable

HumanResources

Recruitment& Selection

Training compliance

Salary & BenefitsAdministration

Payroll

Labor Management

Union Relation

General Manager

General Administration

Environmentalcompliance

Expat Support

Sorting & Kitting LabelingJust-In-Time

delivery to clients

This diagram shows the functions that you will need to perform in your new business operations in Mexico to serve your clients. The

Incubator program takes full responsibility of the blue side of the business.

Mexico’s Industrial Incubator Program: How to qualify

You can qualify for this program if you want to start any of the following operations

� Just-In-Time or distribution operation� Assembly operation� Kitting & labeling operation� Manufacturing operation

Or if you fit into any of these categories

� You have little or no experience in doing business in Mexico� You don’t have a legal presence in Mexico� You don’t require a large facility� You want to experience doing business in Mexico for the first time with a low risk framework� You want to share costs with other small operations.

Are you pre-qualified for the Incubator Program?

What are the Next Steps?

Request your free Application

Form to apply for the Incubator

Program today at:

www.AmericanIndustriesGroup.com/incubator

Thank Youwww.AmericanIndustriesGroup.com

For more information contact:

start@americanindustriesgroup.com

US Toll Free +1 877 698 3905 | Mexico +52 614 439-3631