Economy
Mexico’s Winning the NAFTA Auto Race
Written by Tim Triplett
September 20, 2017
The latest data on automotive production offers potential ammo to U.S. trade officials as they work to renegotiate the North American Free Trade Agreement. Assembly of both cars and light trucks is shifting from the U.S. to Mexico, with Canada largely on the sidelines.
Total light vehicle production in the U.S. and Canada has declined by 4.4 percent in the past 12 months, while in Mexico it has increased by 10.3 percent. Figures from the latest three-month period of June-August show an even more dramatic shift, with the U.S. down by 13 percent, Canada down by 8.1 percent, and Mexico up by 7 percent.
Until this year, U.S. market share of light trucks hadn’t changed much since mid-2009. In the three months through August, the U.S. share contracted by 5.3 percent while Mexico’s share of light trucks jumped by 32 percent, compared to the same period in 2016. Canada’s share declined by 6.9 percent. The U.S. share of light trucks is now 68.6 percent and Canada’s is 12.9 percent. Mexico’s share has hit a high of 18.6 percent, and counting.
Vehicle sales were expected to log a year-over-year increase in August for the first time this year until Hurricane Harvey walloped metro Houston late in the month. Edmunds.com estimates the storm and resulting floods wiped out 2 percent of the month’s anticipated new-vehicle sales. But the damage to the existing stock of vehicles in Houston was likely much greater. Cox Automotive estimates 300,000 to 500,000 vehicles were lost or damaged in the Houston area alone—a hit totaling up to $5 billion, making Harvey the costliest storm ever in terms of vehicle damage.
Experts are still debating how long it will take to replace the vehicles damaged by Harvey, as well as Hurricane Irma in Florida, and whether consumers will opt for new or used cars and pickup trucks. Used car prices were at record highs before the storm. Urgent demand for replacements may drive used prices even higher, prompting buyers to opt for new vehicles instead. Thus, the hurricanes that struck the South could prove to be a windfall for automakers in the fourth quarter.
Tim Triplett
Read more from Tim TriplettLatest in Economy
Fed Beige Book: Economy improves, but manufacturing weak
While general economic conditions across the US improved slightly over the last six weeks, activity in the manufacturing sector was weak, according to the Fed’s latest Beige Book report.
SMU Community Chat: Simonson with the latest on construction
A lot of economists were predicting a recession last year. Ken Simonson, chief economist for The Associated General Contractors of America (AGC), wasn’t one of them.
Housing starts slip to seven-month low in March
Following a strong February, US housing starts eased through March to a seven-month low, according to the most recent data from the US Census Bureau.
Manufacturing activity in New York state continues to soften
New York state saw a continued decline in manufacturing activity in April, according to the latest Empire State Manufacturing Survey from the Federal Reserve Bank of New York
Worldsteel projects steel demand to grow 1.7% this year
Global steel demand will reach roughly 1.793 million metric tons (1.976 million short tons) this year, an increase of 1.7% over 2023, the World Steel Association (worldsteel) said in its updated Short Range Outlook report. The gain will come after a 0.5% contraction in steel demand in 2023. Demand is forecasted to increase another 1.2% […]