Recently, it was announced that the COMPAS (Cooperation Manufacturing Plant Aguascalientes) in Mexico's Bajio region will reduce its workforce. This decision is primarily due to supply chain problems, which have been affecting production. Additionally, adjustments in assembly lines have resulted in fewer shifts. These operational reorganizations are occurring amid a decrease in demand for Mercedes-Benz vehicles. This uncertainty is further compounded as Renault, Nissan, and Daimler (now Mercedes-Benz), who created COMPAS in partnership, may be separating their operations in Aguascalientes.

According to INEGI data, between 2021 and 2023, annual production of Mercedes-Benz vehicles fell by 5%. This downward trend has continued this year, with production in the first five months being 11% lower than last year's. In fact, Mercedes-Benz's productivity in the first five months of each year has consistently declined since 2021, with an average annual decrease of 14%. This contrasts with the national annual production of light vehicles, which increased by 23% between 2021 and 2023. This year, the upward trend continues, with an average increase of 8% in the first five months of the last three years.

Despite the significant challenges and internal adjustments faced by the COMPAS plant, the Mexican automotive industry has demonstrated remarkable resilience, showing robust growth. This underscores the performance divergence among manufacturers and the strategic adaptations needed to remain competitive.

The Automotive Industry in the Real Estate Market

Despite the sector's productivity, its industrial real estate market performance reflects heterogeneous growth nationwide. While it may be less dynamic than other manufacturing sectors, it remains one of Mexico's most important industries, experiencing marked growth driven by the arrival of large companies attracted by nearshoring.

In Aguascalientes, for example, the vehicle and parts sector represents 66% of the local industrial market, according to SiiLA Market Analytics. Over the past year, this market saw moderate growth of 2%. However, its market share decreased by 2%. This implies that despite significant expansions by companies like MATA Automotive, Rane, and Yazaki Group, competition and changes in demand are reshaping the industrial landscape, slightly boosting investments in other productive sectors such as consumer goods, transportation, and logistics.

A similar trend is observed nationally, where despite the automotive sector's growth, there is moderate and heterogeneous dynamism compared to many other manufacturing industries developing due to the e-commerce boom, demand for technological goods and services, and the expansion of logistics and transportation, which create competition and shifts in demand.

SiiLA data indicate that the vehicle and parts sector occupies nearly 27% of the national gross leasable area (GLA). Over the past year alone, the sector's GLA increased by 5%, though its market share dropped by 4%.

In the Bajio region, including Aguascalientes, the automotive industry's GLA grew by 5%, although its market share was 1% lower than the previous year. In the central region, it performed better, contrasting with the north, where the GLA increased by 9% and 6%, and market share rose by 5% and decreased by 9%, respectively.

These findings reiterate the changing dynamics of the industrial landscape, with competition and diversification favoring investments in emerging and technological sectors, including electronics and capital goods. However, they also bring to light the significant challenges the automotive industry is grappling with, particularly in boosting investment levels in new infrastructure.

Amidst these changes, the automotive companies in Mexico are not just weathering the storm, but also implementing optimization and diversification strategies. They are investing in new technologies and expanding their product lines to include electric and hybrid vehicles. Moreover, the nearshoring trend is attracting more foreign manufacturers, revitalizing demand for industrial spaces in crucial regions. This demonstrates the industry's potential for growth and adaptation, inspiring confidence in its future.

Looking ahead, the automotive sector is poised to remain a fundamental pillar of the industrial market in Mexico. However, it must swiftly adapt to global sustainability and technology trends. Government policies supporting the industry and infrastructure investments will also play a crucial role in this transformation process.

For more information on the performance and development of the industrial sector in Mexico, explore SiiLA REsource or contact us at contacto@siila.com.mx.