Jose Luis Valdes only has one complaint about the Volkswagen New Beetle that he bought at the beginning of the year. 'It's an export car, which makes it hard to get parts,' he says. 'It's my endless gripe with mechanics here, although I've hardly had any problems at all.'
An academic with a researcher's post in the Mexican Senate, Valdes needs his car for the city, but also wanted a vehicle to take him out of town. An escape from the hectic capital in which almost 25 percent of the nation's population is concentrated. 'It's very good for long trips. It has good stability and suspension, and the engine is similar to the Jetta, almost the same power but in a lighter car,' he says.
Buyers such as Valdes, buoyed by Mexico's economic recovery, are pushing the market to a feverish sales pace this year. First-quarter sales of 195,569 cars and trucks - up 41.8 percent from the same period last year - far exceeded expectations. Forecasts have total national sales this year growing 10 percent from last year's total of 665,783 cars and trucks.
Even last year's figures mark a significant rebound from 1995, when the devaluation of the peso plunged the economy into recession. Mexico's government officials say there are 3,000 new jobs created daily in the automotive industry - more than 1 million a year, if official statistics are correct.
Honda is one of the automakers that expects the greatest growth, a towering 40 percent sales increase on the 18,859 vehicles it sold last year. Of the top five sellers, Nissan is forecasting a sales increase of 18 percent this year; General Motors, 6 percent; Volkswagen, 20 percent; DaimlerChrysler, 30 percent; and Ford, 15 percent. Market leader GM accounted for 26.5 percent of Mexican vehicle sales with 176,257 cars and trucks last year.
The Aisa dealership, a spotless glass and chrome world where both customers and staff look poised for a power lunch, has added salespeople to handle the growth. 'Two years ago there were 35 of us in sales and now there are 60,' says Emmanuel Hernandez, sales manager with Aisa, which sells more than 100 models by various makers and was one of the first GM dealerships in the capital.
Although inflation began easing in 1997, sales did not increase significantly until late last year, when they were up 4 percent over 1998, he said.
Among uniformed cleaners who endlessly mop the dealership's marble floor, Hernandez projects confidence: 'We have a lot of assurance that nothing (referring to the 1995 devaluation) will happen in this next change of administration.' Outside investors are backing projects in Mexico, he said, because of the qualified labor force and improved management of the economy.
The most popular car in Mexico is Nissan's Tsuru subcompact. 'This is the type of car which sells here, the VW Pointer, the Ford Fiesta - this type accounts for 50 percent of sales,' Hernandez says.
His impression of the health of the nation's economy in this election year appears justified by Moody's Investors Service in New York, which in March upgraded Mexico's bond rating.
'In general, the Mexican economy is doing well. Cars are picking up domestically. The government has met all its fiscal targets, and it seems that financing is more available now,' said Moody's analyst Luis Ernesto Martinez Alas, in mid-May.
Indeed, the availability of credit at fixed rates has done much to encourage consumers. Rates offered directly by the auto finance arms have become increasingly attractive in the last year, and even banks are beginning to open up. Volkwagen also notes an improvement in credit deals in the last six months, with rates as low as 1.8 percent.
Luis Lesur just exchanged his 5-year-old VW Golf for a cheaper new VW Derby hatchback, which cost him 140,000 pesos ($14,547). 'I went directly to the dealership, which was operating offers through their own internal credit. I think this means more people are buying right now and have more confidence.'
He believes consumer confidence started building again only in mid-1999. Lesur, who is in his early 60s, says older consumers such as himself finally were convinced that the economy really was more stable: 'At least now you don't think your capital may suddenly be reduced by half between Christmas and New Year, which is what happened before, plus that your debts could increase tenfold!'
Lesur bought at a fixed interest rate and paid it off in the agreed 12-month period. Here, he is not typical, as the greatest demand in Mexico is for 36-month credit deals, followed by 24.
The consumer profile tends to be much like that in the United States, he says, with family vehicles - here referred to as 'suburbans' - gaining a significant acceptance. But for reasons of price, compacts are even more popular. 'There are lots of us buying these,' he remarks, 'and now Renault is coming back to Mexico, in an alliance with Nissan.'
Before purchasing his New Beetle, Valdes looked at the Honda Centra and Tsuru, but he decided on VW's trendier new model. 'It's medium-sized, not small, contrary to what some people think,' he says.
Manuel Molina Sanchez, a salesman at VW dealer Automotores Azteca where Valdes made his purchase, says Valdes, a 42-year-old professional, fits the typical consumer profile: between 25 and 60 years of age, predominantly (85 percent) male, and 70 percent professionals, as opposed to salaried workers. Of these, 45 percent are first-time buyers, such as Valdes.
The rise in Valdes' fortunes and confidence is reflected throughout the industry, agrees Molina, whose glass-paned booth opens to a buzzing, bustling sales floor .
VW, second in domestic sales, offers two sought-after models for Mexico: the Pointer subcompact, whose sales have surged in the last year, and the perennially popular Jetta.
'Today, people are looking for an economic car and looking for credit plans with zero interest,' Molina says, 'so really everything is selling, and the automotive environment in general is good.'
But all is not positive. There are pessimists such as Dr. Pepe Zaragoza, who just paid cash for his Golf GTI in Nuevo Laredo near the United States border, where prices are lower.
'Of course, I have no confidence in the country's economy,' he scoffs. 'I think I got up the courage to buy it out of the fear that later it would be out of financial reach. I wanted to make the purchase money upfront or with a fixed interest rate precisely because of fear of a devaluation.'
Asked for the reasons for this record sales year, Molina admits: 'It's also partly because people are foreseeing a problem after July's elections. They don't want their money sitting in the bank to become dust, so better to spend it on a car.'
Industry experts have no doubts about long-term growth. INA, a civil association that represents the nation's auto suppliers, forecasts a flatter market in 2001, after this year's dramatic surge in sales. But it still expects 2001 to be 0.5 percent higher than 2000, with greater increases in 2002 and 2003.
And this is sparking more investment. For example, there are rumors of two new Hyundai plants here, one for small trucks and the other for compact vehicles.
Omar Zuniga, an INA spokesman, sees 'a mood of both confidence and precaution.' But, he adds, 'we don't expect problems after the elections. The economy is going well, so credit is being maintained.'
You can e-mail free-lance writer Barbara Kastelein at [email protected]