Chinese Imports and their Impact on the Spare Auto Parts Market in Mexico
Lourdes Álvarez and Liliana Cuadros
Consultation with experts on problems encountered in spare parts market ( ...continuation )
b) Main problems

In both 2009 and 2011 the lack of regulation was perceived as one of the main problems. In Mexico there are no standards on the quality and performance of auto parts introduced into the country. The Mexican government has been asked on repeated occasions to take action and to demand a standard of quality for the benefit of consumers, but specific standards have not been developed.

Piracy was also mentioned on both occasions, and is a problem primarily for manufacturers. Chinese and Taiwanese companies that participate in expositions tend to copy auto parts from other companies, and no actions are taken in this regard. Auto parts manufacturers groups respond to this problem by organizing forums to help distributors learn to distinguish original auto parts from pirated products. Still, the government does not focus on resolving this problem.

Triangulation was mentioned as a significant problem two years ago, but in 2011 it was given less importance. This is because many products do not pay tariffs, and these have decreased, so companies are importing more products legally. Also, multinational corporations are those that most import products, especially components, and are able to carry this out as intra-firm trade.

Another problem that persists is highway insecurity, affecting the spare parts market in two ways: first, through increases in operation costs due to insurance payments and security systems used, and second, because stolen merchandise is sold at very low prices, thus affecting the market.

c) Way in which Chinese auto parts behave

The perception of competition from Chinese auto parts in the spare parts market has changed. In 2009 it was felt that they had not managed to significantly penetrate the market, and thus did not pose a threat in Mexico. Currently, however, it is felt that Chinese auto parts have extensively penetrated the market, but they are now viewed as an opportunity to reduce manufacturing costs, and to introduce new brands and product lines with lower prices. Since there are problems meeting the demand for auto parts, imports help to resolve this situation. It is felt that Chinese auto parts are convenient, even though it is necessary to pay for them up front, together with the corresponding taxes, and then wait up to 45 days for an order to be filled.