Volume 43, Number 169,
April-June 2012
Chinese Imports and their Impact on the Spare Auto Parts Market in Mexico
Lourdes Álvarez and Liliana Cuadros
CONCLUSIONS ( ...continuation )

Chinese auto parts imports have translated into supply strategies implemented by companies in order to lower manufacturing costs, open up new product lines and avoid product shortages or low availability of products.

In the last two years the perceptions of retail distributors have improved with regard to the quality of Chinese auto parts. They are selling them more and view brand name auto parts manufactured by multinational corporations in China as being as good as those made by companies in Mexico. Regarding the functioning of the spare parts market, we have identified five important points: fragmentation, growth, specialization, regulation and corruption.

The sector is fragmented–no single company has a major share of the market nor can it seriously influence the results of other companies. The sector has weak barriers to the introduction of new players; there are high inventory costs and unpredictable fluctuations in sales. Given the growth and age of the vehicle fleet, we can expect spending on auto repair to continue to increase, and sales will increase, especially in electronic auto parts.

Specialization in the spare parts market is ever increasing, since the vehicle fleet has grown, together with the number of makes and models. The existing infrastructure is not sufficient for this level of diversity. Appropriate computer systems and training are still lacking but necessary for enabling so many distributors, spare parts companies and auto mechanic shops to coordinate and offer quick service to clients. This is very important since inventory management is a factor in the success of companies. Also, if this system was well structured, there would be greater control over smuggling and piracy.

It is necessary to focus once again on the creation of standards for the automotive and auto parts sector, and that importers be required to assure that the products introduced into the country meet such standards. Piracy is a problem affecting the subsector, and isolated and only minimally effective actions have been taken by the government and by associations, but they are not reflected in the results observed in this industry. To attack this problem it is necessary for the sector's companies to unite and lobby for changes, but there are many conflicting interests. Some companies import components and find it easier to do so without having to meet quality standards. Meanwhile, not a single initiative for better regulation of this situation has been promoted in two years’ time.

In general we can say that the major change in the spare parts market in the last two years lies in the perception of Chinese auto parts. For a large number of stakeholders, Chinese autoparts have come to represent an opportunity to help them lower manufacturing cost, to supply the market (which sometimes experiences product shortages) and to compete with new product line at lower prices. Chinese auto parts are becoming integrated into the Mexican market, and acceptance of their presence is steadily increasing.

Published in Mexico, 2012-2017 © D.R. Universidad Nacional Autónoma de México (UNAM).
PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 48, Number 191, October-December 2017 is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
CP 04510, México, D.F. Tel (52 55) 56 23 01 05 and (52 55) 56 24 23 39, fax (52 55) 56 23 00 97, www.probdes.iiec.unam.mx, revprode@unam.mx. Journal Editor: Alicia Girón González. Reservation of rights to exclusive use of the title: 04-2012-070613560300-203, ISSN: pending. Person responsible for the latest update of this issue: Minerva García, Circuito Maestro Mario de la Cueva s/n, Ciudad Universitaria, Coyoacán, CP 04510, México D.F., latest update: Nov 13th, 2017.
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