What's Going On In This Country?

December 12, 2016 Edition
BY: SANTIAGO VERDUGO

Who needs NAFTA? Sales of cars and light trucks to Mexicans set new records in November and year to date as widely available credit and financing options helped automakers and consumers overcome rising interest rates and a weaker peso.

Auto sales jumped 23 percent to 154,616 vehicles last month compared to November 2015. For the year through November, auto sales rose by 19 percent. Auto loans remained at record levels and auto prices were stable. The industry was on pace to sell a record 1.6 million vehicles for the year and on track, barring any shocks to the economy, to hit around 2 million by 2020.

Nissan remained tops in the Mexican market with a market share of 25 percent, followed by General Motors at 19 percent and Volkswagen at 16 percent. Toyota, which is expected to post record sales this year, was in fourth place with 6.4 percent of the market. About half of the cars sold in Mexico are imported.

The biggest mover so far this year has been Kia, whose sales grew nearly 500 percent in the first 11 months of the year after making a big push in the retail market and opening its first Mexican factory near the northern city of Monterrey.

Maybe Carlos Slim, the richy rich richest Mexican of them all, is right, Mexico doesn’t need to export, we just need to sell more domestically if we lose our NAFTA rights.

Screw the USA. Mexico should continue diversifying its market and look towards China and other countries in order to reduce its trade reliance on the United States, said Mexico's former President Vicente Fox.

Fox noted that despite the fact that Mexico is one of the countries with the highest number of free trade agreements, the United States is still its main partner, and Mexico is sending almost 80 percent of exports to its northern neighbor.

But he noted that a market "of over a billion inhabitants ... is a super market for Mexico."

Since 2013, Mexico and China have put in place mechanisms to promote bilateral and permanent dialogue on key economic issues, including a high-level bilateral work group that meets annually to oversee trade promotion, and cooperation in industry and mining. A similar group focuses exclusively on investment. Meanwhile, Donald Trump is expected to be erecting barriers to trade with Mexico.

Mexico is ready to cooperate with China in investment, finance, tourism and special economic zones, President Pena Nieto said.

Fox said that South America and India should also be in Mexico's sights without neglecting the United States and Canada.

Maybe the Donald should re-think this. Vast amounts of U.S. natural gas, a product of the shale revolution, (fracking), is being shipped to feed Mexico's growing national gas demand. In the wake of its 2013 energy reforms, the Mexico has been gradually reshaping its oil and gas sector, with much of its energy needs being met by its neighbor to the north.

Last year, Mexico's Energy Ministry set a goal to triple its gas imports from the U.S. over five years, as part of a plan to bolster its own energy infrastructure. Among developed nations, U.S. natural gas prices are by far the least expensive.

The expansion of the U.S. cross-border pipeline network into Mexico has been driven primarily by strong growth in Mexico's natural gas demand in the power sector, declining domestic production of gas, and the lower prices of U.S. pipeline gas compared with more expensive liquefied natural gas (LNG) imports.