The Mexican auto industry is one of the most important sectors to the country’s economy. It is estimated that, every year, it contributes as much as 4.7% of the nation's GDP while serving as a crucial connection with the US and Canadian markets. So, it would be no understatement to say that Mexico runs on cars.

At Desteia, we believe cars are essential to Mexico and wanted to look much closer at how it works. In this article, we put together our findings, from the overall importance of the auto industry to the economy to its internal distribution. In other words, not just how many cars Mexico builds but where it is building those cars.

To start, it is useful to quantify the overall role Mexico plays in the global automotive sector. In 2023, it was estimated that car manufacturers created as many as 94 million vehicles. As we show in the graph below, Mexico accounted for over four million of those cars, making it the seventh largest vehicle manufacturer in the world, with a production almost equal to that of Germany and South Korea. A fact that is much more prominent when considering Mexico lacks any national car brands that commercialize on the global stage.

[iframe]https://datawrapper.dwcdn.net/4oPaB/1/|CustomHeight=700px[/iframe]

Given that Mexico is amongst the ten largest car manufacturing countries, it should come as no surprise that the sector accounts for a considerable share of GDP. In fact, recent estimates suggest that the auto industry as a whole contributes as much as 4.7% of Mexico’s GDP—down from a slightly higher 4.74% in 2023. In the figure below, we plotted the share of Mexico’s GDP that comes from different industries. Manufacturing as a group (excluding auto) represents the largest single contributor to Mexican GDP with 16% of the total. It is followed by the wholesale and retail sectors with 9.8% of GDP each. Automotive on its own is the sixth largest sector in Mexico.

[iframe]https://datawrapper.dwcdn.net/eiNvr/1/|CustomHeight=700px[/iframe]

Now, a natural question to ask is how such a large industry is distributed across Mexico. Namely, to understand if the auto industry is a homogenous reality across the country or if it is concentrated in key regions. Specially, given the existing trade relation with the US—of which Mexico is the largest trade partner—, you’d expect a major presence along the country’s northern border. However, our research suggests quite the contrary.

To understand the distribution of the auto industry, we identified the 26 major vehicle factories in the country belonging to 13 different countries. For each factory, we then proceed to locate each individual factory with precise coordinates. In the map below, we include all locations for Mexican vehicle factories and assembly lines. If you hover on each point, you’ll be able to see the name of each company.

[iframe]https://datawrapper.dwcdn.net/UgcTT/2/|CustomHeight=700px[/iframe]

An easier way to understand the findings of the above map is to create a heat map that shows the number of car factories by state. In the map below, we did just that, with lighter shades of yellow representing a small presence of car factories while darker shades of yellow represent a higher number of factories. As the figure shows, there is, indeed, some presence of car factories along the US-Mexico border—in fact, five out of the six border states have at least one car factory. However it is meager when compared to the Bajío and Central regions of Mexico. Just the central state of Guanajuato has six factories within its borders—the entirety of the border has one factory more. 

[iframe]https://datawrapper.dwcdn.net/DEbzS/1/|CustomHeight=700px[/iframe]

The above, then, implies that car manufacturing is more complex than just exporting vehicles to the US. It likely relies on a number of firing imports from raw materials to car parts—all of which are needed to put together a vehicle on itself. Thus, a central location could allow companies to both export to the US while also having access to Mexican ports. In other words, it is an ideal location in between an end market in the US and the source of needed inputs.

We decided to go further in our analysis to understand the relevance of ports to the auto industry. To do this, we calculated the distance from each of the 26 factories identified to the four largest ports in Mexico: Lázaro Cárdenas, Manzanillo, Veracruz, and Altamira. Then, we identified, for each factory, the closest port as a suggestion of which port is likely being used by manufacturers.

In the figure below, we plotted the four largest ports in Mexico by the number of factories for which it is the closest alternative for trade. Lázaro Cárdenas was the most popular port with 34.6% of factories having it as its closest alternative. It was followed by Altamira with 26.9%—a surprising feat since Altamira is often the fourth largest port with a considerable gap to others. Veracruz, and Manzanillo both accounter for 19.2% of factories.

[iframe]https://datawrapper.dwcdn.net/n9g8c/1/|CustomHeight=700px[/iframe]

Even though having 26 major car factories is an achievement on its own, Mexico’s manufacturing capabilities for car parts are much higher. Another sign of the magnitude of the auto industry in the country is the sheer number of auto part manufacturers currently established in Mexico. According to figures from the Mexican government, there are 1,948 factories of this type in the country. That is, nearly 75 times the number of car assembly plants of factories in the country. 

In the figure below, we plotted the number of car part factories by state. Similar to factories assembling entire cars, there is a strong presence of the Bajío region, with Guanajuato playing a disproportionate role. However, when it comes to parts, the north plays a much larger role than when it comes to assembly, with high presence in the statues of Chihuahua, Coahuila, and Nuevo León—although each is, on its own, below the number of factories found in Guanajuato. 

[iframe]https://datawrapper.dwcdn.net/JaJBb/2/|CustomHeight=700px[/iframe]

In sum, Mexico plays a crucial role in the global automotive industry and, in turn, the automotive industry plays a crucial role in the Mexican economy. Despite common perceptions, it is not the north of Mexico that controls the auto sector but, rather, the center of the country, showing the importance of connecting imports arriving at ports with the potential to export at the border. 

At Desteia, we believe all sectors should have similar levels of visibility. If you’d like to see how our product could help your company understand the dynamics of an industry, make sure to schedule a demo!