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
Mexico's automotive industry and Chinese imports ( ...continuation )

When we break down Chapter 87 to ten-digit classifications, we find that 84.39% of imports are auto parts, and the importing of complete vehicles is minimal. The auto parts that have the most relative weight include: accessories, radiators, brakes, disc brakes, transmissions, axles, gearboxes, clutches, tires and rims, steering wheels and columns, and steering boxes. Mechanical parts have the highest growth rates, and there is an increase in spare parts for vehicles for transporting persons that have a cylinder larger than 1000 cm3 and larger than 1500 cm3 that are registered under tariff item 8703. Vehicles registered under this heading were previously imported, indicating that their spare parts are imported.

The situation for the auto parts subsector in China

China has made an impressive effort in recent decades to upgrade its automotive-auto parts chain, and although its levels of science and technology cannot compare with those of industrialized countries, its own trademarks have already been introduced in markets in various parts of the world, and its auto parts exports are growing (Dussel, 2010b).

China's automotive industry was developed on the basis of the economic reforms of the 1980s that were aimed at transforming a fragmented automotive industry without financial resources and with obsolete technology into an oligopoly in which Chinese automotive groups would dominate and foreign investment would participate with financial and technological resources and administrative knowledge. With the harmonization of changes in policies on foreign investment, trade, consumption and the automotive sector, an extraordinary growth in production was achieved, together with a change in the industry's structure (Álvarez and Sepúlveda, 2006; Álvarez, 2007; Dussel, 2010a, 2010b).

The Automotive Sector Industrial Policy enacted in July of 1994 gave an impulse to the industry's growth by promoting foreign investment, and it established priorities for developing automotive components and parts, passenger buses, trucks, and motorcycles for national industry. Later, in the Tenth Five-Year Plan (2001-2005), the vision for developing the industry was focused on establishing two or three international, competitive automotive groups and forming three auto parts-producing groups that would supply 70% of the national market, with the aim of auto parts exports representing 20% of their total sales.6

The Automotive Sector Industrial Policy published in 2004 changed the vision for the industry's development. Consumers of private vehicles became the main actors, and regulations for consumer and environmental protection were included. Loans for purchasing vehicles and services such as insurance policies, automotive shops and parking lots were all anticipated and promoted. Special attention was given to the auto parts industry, with the hope that manufacturers would insert themselves into international productive chains. Programs and resources were prepared so the strongest manufacturers would develop their skills to enable them to make commitments to mass production and to become suppliers of modules for the final industry. In order to maintain growth in the automotive industry, other industries were developed, specifically the metallurgy, petrochemical, machinery, electronics and textile industries.

During the 2009 crisis, the results obtained by automotive manufacturers located in China were exceptional, with a 21% increase in income and 52% increase in profits. They achieved these results because they maintained relative stability in the price of raw materials, a high rate of use of installed capacity, and rapid growth in production in China's automotive market (Research Department of Industrial Economy, 2010).

In terms of exports, between 2001 and 2008, the auto parts sector experienced accelerated growth, with an increase from 1,632 to 27,195 million dollars. Beginning in 2005, the auto parts balance started to show a surplus, associated with the implementation of the Automotive Sector Industrial Policy of 2004, and with the strategy of multinational auto parts corporations to move production processes to China to obtain a cheap labor force (Álvarez, 2007). Between 2008 and 2009, China auto parts exports were affected by the financial economic crisis and the tendency toward protectionism occurring in a number of countries, and consequently auto parts exports dropped by 44.4% (Research Department of Industrial Economy, 2010).

6 The complete text in English: http://english.peopledaily.com.cn/features/lianghui/zhureport.html

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PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 195 October-December 2018 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,
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