Mexico's auto industry is scrambling to meet U.S. demand for supplier parts and high-demand vehicles after falling weeks behind in battling the coronavirus pandemic and restarting its manufacturing base. But to catch up, it must navigate both delicate economic conditions and steadily rising COVID-19 deaths.
The challenges there, in America's largest base of imported U.S. vehicle content, are myriad.
Mexican parts suppliers face liquidity issues that could get worse as orders stack up. Local auto sales have collapsed. Health experts don't agree on Mexico's new phase of reopening the economy. And with coronavirus infections spiking, Mexico's restart may be vulnerable to another shock that could ripple through U.S. and Canadian auto factories.
The complexity of the moment can be glimpsed in the Mexican state of Puebla, which is home to a sprawling Volkswagen assembly complex, a 4-year-old Audi plant and hundreds of suppliers. While Mexico's federal government approved a May 18 date for the country to start a gradual return to auto manufacturing, Puebla Gov. Miguel Barbosa is resisting at the state level because of virus cases there. Puebla is now targeting mid-June for a restart.
The good news last week was that Mexican parts suppliers — who shipped about $70 billion worth of components to the U.S. last year — have mostly restarted production. And automakers such as General Motors, which makes popular pickups and crossovers at Mexican plants, are gradually increasing their output to replenish U.S. inventories. Likewise, Ford, Fiat Chrysler, Toyota, BMW, Nissan and others said they had returned to auto production there, or will this week.