Colombia ousts Brazil as Mexico’s top automotive export destination

There has been a change in the composition of the main car export destinations from Mexico over the last two years. Colombia has become the main Latin American destination for Mexican-assembled cars, displacing Brazil, the region’s largest market, which for years accounted for most Mexican exports in the region and is now in fourth place.

The United States remains the primary destination for Mexico’s light automobile exports. It receives practically 80% of the cars assembled in the country destined for export. Canada, Mexico’s other trading partner under the T-MEC, is second. But looking south of the continent, things are not the same as they used to be.

The Colombian market, which in 2005 was ranked as the ninth export destination for light cars assembled in Mexico worldwide, is currently in fourth place, according to figures released by the Mexican Association of the Automotive Industry (AMIA).

“This change of positions in the ranking stands out, where (Colombia) has replaced those who were previously our trading partners in Latin America,” said Fausto Cuevas, CEO of the AMIA, at a press conference in early July.

Car exports to Colombia from Mexico have grown over the last ten years, coinciding with the liberalization of Mexican exports of this product in 2011, determined under the Free Trade Agreement between the two countries.

In contrast, the drop in Mexican exports to Brazil coincided with the entry into force in 2019 of free trade in automobiles between Mexico and Brazil, but also with the change in the rules of origin for trade in automotive sector products between the two countries.

The Economic Complementation Agreement (ACE-55), which regulates trade between Mexico and Brazil, established raising from 35% to 40% of the minimum of automotive components produced with Mexican or Brazilian origin materials.

Juan Pizano, a partner at consulting firm Deloitte, noted in 2019 that despite voices that viewed the entry into force of the rules of origin negatively, the liberalization was an opportunity for Mexico to continue exporting to the Brazilian market.

“Even though some opinions have pointed out that said rule of origin would slow down free trade between both countries, due to the complexity that exists to comply with it and a possible stricter supervision, at Deloitte, we consider that the scenario will not bring negative consequences for the national market,” he wrote in a note three years ago.

Three years and an unexpected pandemic later, Deloitte’s hypothesis did not come true.

Mexico exported during the first half of 2022 some 13,317 light vehicles to Colombia, above the 11,609 sent to Puerto Rico, the 9,863 sent to Chile, and the 6,022 to Brazil.

According to AMIA, most Mexican exports to Colombia during the first six months of 2022 were SUVs (46%).

The most exported models to the Colombian market from Mexico were the Mazda CX-30 (4,212 units), Nissan March (1,018 cars), and the Nissan NP300 pick-up truck (853).

With information from Bloomberg