Mexico gears up for change

By / 8 years ago / Features / No Comments

Mexico as a country is benefiting from a renaissance currently as more private investment is heading the country’s way as the government has carried out reforms to energy, telecoms, education and tax.

Just recently AT&T has completed two major acquisitions of Mexican telecoms providers and with this, greater external investment brings with it more and better paid jobs, and one key sector that is already benefitting from this is the automotive industry.

Honda, Mazda and Nissan have increased or started production in Mexico since 2013 and BMW, Kia, Daimler and Toyota have announced plans to start production in the coming years. GM and Ford have also announced multi billion dollar investment in engine and assembly plant expansion.

As the number of private industry jobs increases for the country’s growing middle classes, Mexican workers will have more disposable income to buy cars which suggests new car sales will continue to grow over the coming years.

On the back of this positive economic news comes the fact that online global remarketing company Autorola has set up its 18th wholly owned subsidiary in Mexico City in recent weeks to add to its recent investment in Brazil, its first in south America.

With all the new car growth comes a need for Mexico’s used car industry to become more sophisticated and better equipped to deal with the ongoing growth in used car numbers coming back from part exchanges and the company car and rental sectors. Autorola’s role will be to help educate and build the professionalism of the used car industry by improving processes and standards.

“Out of 2-3,000 franchised dealers in the country, only around 50 take used cars seriously. They will buy trade-ins to support their new car activity but don’t proactively source used cars from the market to trade which will have to change,” explained Alfredo Hernandez, Autorola Mexico’s new country manager.

“That leaves a strong independent network of used car dealers to manage the buying and selling of used cars, which they do very well. Typically they have between 20-30 used cars in stock and are always looking to keep their forecourts busy.

“However, with a growing new and used market is enough space for franchised dealers to improve their focus on used cars in addition to the independent providers doing their thing.

“Our job will be to use our online remarketing, inspection and fleet management tools to help raise used car standards to improve values for asset owners and to make more cars available to dealers to buy and sell through our online portal,” he added.

Nissan continues to dominate the home market with around 25% market share followed by GM (20%), Volkswagen (15%) and Ford and Toyota (both of which who have around 10% market share). Typically cars in the compact and sub-compact sectors are the most sought after as they are fuel efficient and cost effective to run.

On the used side of the market, the average price of cars is around $10-12,000 (€9,350-€11,220) with around 50-60,000km on the clock at two-three years of age.

The market mix is also becoming more varied as the growth of private investment is fuelling the number of company cars. Rental fleets continue to grow on the back of an expanding tourism industry too.

“Our mix of online services and inspections will improve the used transaction process, speeding it up and improving residual values. They will provide much needed support to the rental and leasing company returns, even when used cars have higher mileages on the clock,” said Hernandez.

“Online buying is still something that people do with lower value items such as books and CDs, but this is already changing just as it has in other major markets. Autorola with its 19 years of experience in online remarketing is in a good place to educate and support the sector,” he added.

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