Chinese Imports and their Impact on the Spare Auto Parts Market in Mexico
Lourdes Álvarez and Liliana Cuadros

The auto parts sector supplies three markets: the assembly plants market known as the terminal market, the export market and the spare parts market. Despite the difficult situation this sector has experienced, and the fact that the domestic demand for new vehicles has not been fully recuperated–it grew by 8% in comparison to 2009, but still remained 20% below its level in 2008 (amia, 2011) –the spare parts market has been characterized by sustained growth, with a 10.88% increase in sales from 2009 to 2010, and a growth rate of 13.7% expected in 2011 (Calderón, 2011). This phenomenon is associated with three factors: the growth and age of the country's vehicle fleet and consumers’ economic situation.

The vehicle fleet grew 42.85% between 2006 and 2010, with an increase from 21 to 30 million units. Most (66.4%) are passenger vehicles, 28.6% are large and small trucks, and only 1% are passenger buses. The vehicle fleet has an average age of 16 years (inegi, 2010), but 8.9 million vehicles that are 1985 or earlier models are also registered. The age structure of these vehicles is unknown, but these units are at least 26 years old. Since the country's economic recovery is still in the distant future, domestic consumption will not be recuperated in the short term and it will not be possible to renew the vehicle fleet, which implies the ongoing repair of vehicles with an average cost of us$250 per unit (Calderón, 2011). Currently, the spare parts market is considered to have an approximate value of 124,179 million Mexican pesos, including vehicles, buses and trucks (inegi, 2010).

Table 4 presents a projection of the value of the spare auto parts market for light vehicles for different years. It is expected that expenses in tires and electronics systems will increase at a weighted average rate (war) of 7.68 and 6.89%, from 1999 to 2019, the highest among the factors studied. Expenses in mechanical repairs will decrease by 12%, while expenses in electronics systems will increase by 4%, since autos have increasingly more electronic components.

The spare parts market is fragmented and is formally composed of auto parts manufacturers, wholesale distributors, auto parts rebuilders, spare auto parts companies that sell both new and used parts, self-service stores, car dealers, companies that sell used parts (known as deshuesaderos in Mexico), mechanic shops and consumers (Figure 1).

Within the formal structure, we find 1,236 manufacturers of primarily gasoline motors and their parts, electric and electronic equipment and parts, steering and suspension systems, brake systems, transmission systems, seats and interior accessories, and die-cast metal pieces. In this category we find multinational corporations such as Bosch, Delphi, Hella and Gates de México that manufacture and/or import auto parts and components from other countries where subsidiaries from the same groups are located. Auto parts from these companies, whether imported or made in Mexico, are identified in the market as “brand name parts” and they are considered to be of good quality. The flow of auto parts goes to wholesalers, to retail trade that includes spare auto parts chains that are able to purchase in large volumes, and to car dealers that sell auto parts and also have car repair shops.