Chinese Imports and their Impact on the Spare Auto Parts Market in Mexico
Lourdes lvarez and Liliana Cuadros
SPARE AUTO PARTS MARKET IN MEXICO ( ...continuation )

The price war in this sector leads to a reduction in profit margins, and the insufficient production of auto parts leads to increased imports and new product lines. This creates opportunities with the expansion of product portfolios and helps to reduce costs. Imports from China have increased dramatically, reaching a level of 40% of sales in some companies8 (Meeting on Spare Parts Market, REMER, 2011).

Consultation with experts on problems encountered in spare parts market

Since information on the spare parts market is very limited, the research process was initiated with in-depth interviews with five experts on two occasions. The first was during 2009 (Cuadros, 2009), and the second was in January 2011. Three basic topics were addressed: new tendencies in the spare parts market, the main problems experienced in this market, and the way in which Chinese auto parts compete.

a) New tendencies in the spare parts market

In 2009 the experts considered specialization as the most important tendency. They reported that the incorporation of new car brands was obliging spare parts companies to specialize by make and model, since they were no longer able to maintain large inventories. In 2011 the experts considered the introduction of Chinese, Taiwanese and Brazilian products as the main tendency. This tendency is on the rise, and the perspective of Mexican business owners has changed from considering these products to be a threat, to rather integrating them into their production in order to lower costs, or integrating them into their catalogues in order to expand product lines and offer better prices.

8 Information obtained in an open survey at the Meeting for Evaluation of Spare Parts Market (Reunin de Evaluacin del Mercado de Repuesto) organized by the National Auto Parts Industry (Industria Nacional de Autopartes) in January 2011.