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

In wholesale trade there are 994 economic units that sell national and imported auto parts, and that purchase parts from manufacturers or directly import them. However, there is a group of independent wholesalers that are major distributors and that exercise significant control over the market and provide specialized services to their clients through their inventory management. They also have retail chain stores.

In retail trade there are 29,019 units dedicated to selling new parts and spare parts for autos and small and large trucks, and 4,685 units dedicated to selling used auto parts. Recently, a new form of retail sale of auto parts occurs in self-service stores (3,319) that sell batteries, tires and rims, and other parts. This system is not necessarily convenient, since the system for exchanging old batteries for new batteries was disrupted when their sale was permitted in supermarkets.

There are 6,492 units dedicated to selling new and used autos. Of these units, 1,600 are licensed agencies for auto manufacturers established in 210 cities and selling 42 brands of autos, trucks and their parts.

Finally, there are 322,784 auto mechanic shops that repair 30.7 million vehicles. These shops are an importance source of sales, and the mechanics who work in them influence purchase decisions since they give advice to final consumers with regard to brands, quality and prices.

Also involved in this market are national and foreign insurance companies particularly from the United States7 that sell vehicles that have been declared a total loss. Auto parts that are still usable flow into the spare parts market, and these original parts are sold at low prices.

Since this sector is fragmented, no single company has a major portion of the market, or has the capacity to profoundly influence the results of others in the sector. There are no leaders with enough power to regulate events, or weak barriers against the introduction of new players, high inventory costs, or unpredictable fluctuations in sales (Porter, 1990).

Small companies in this sector have limited financial capacity, little administrative knowledge, limitations in the use of computer technologies, and their main factor of success is their inventory management. Nevertheless, internet orders, electronic catalogues, telemarketing and the use of mobile devices such as Scan Telcel are all tools that are increasingly used by distributors and adopted by companies (Calderón, 2011).

7 Interview conducted with a leader of people who sell used auto parts, known as yonkers in Ciudad Juárez, Chihuahua, in 2006.