Mexican Automotive Industry Outlook towards

2020

Eduardo J. Solís SánchezExecutive PresidentMexican AutomotiveIndustry Association

October 6th, 2016Mexico City

Automotive SectorEconomic Relevance:

2

Top generator of foreign reserves. With a foreign trade surplus of 52.5 billion dollars

in 2015

Contributes with 3.1% of total GDP and 18.3% of

manufacturing industry GDP

Mexico has become the 7th

largest manufacturer of vehicles and the 1st in Latin

America

4th largest exporter in the world

5h largest automotive parts exporter and first supplier for

the United States

25% of manufacturing exports

Producción y Exportación– Contributed with 3.7% of total world production.– More than 80% of total production is directed to foreign markets.

3

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Jan-

Ago

201

5Ja

n-A

go 2

016

Mill

onun

its

Light vehicle production

0.00

0.50

1.00

1.50

2.00

2.50

3.00

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Jan-

Ago

201

5Ja

n-A

go 2

016

Millon

units

Light vehicle exports

Source: AMIA.

∆0.7%

∆-2.7%

Automotive Industry GDPFrom 2008 to 2015, Mexican automotive industry has consolidated as one of the most important in the Mexican economy increasing its share of total GDP by 58% and its share of manufacturing sector GDP by 53%

4Fuente: INEGI - PIB y Cuentas Nacionales. Precios constantes base 2008.Notas: P se refiere a datos preliminares. Automotriz considera Fabricación de automóviles y camiones, Fabricación de carrocerías y remolques, Fabricación de partes para vehículos automotores, Fabricación de otro equipo de transporte.

2.0%

1.5%

2.1%2.3%

2.5% 2.6%2.9%

3.1%

2008 2009 2010 2011 2012 2013 2014 2015P

Automotive industry shareTotal GDP

12.0%

9.6%

12.8%14.1%

15.3% 15.9%17.1%

18.3%

2008 2009 2010 2011 2012 2013 2014 2015 P

Automotive industry shareManufacturing industry GDP

… the automotive industry impacts 84 economic activities of manufacturing industry and 73 of trade and services.

Manufacturing sector in Mexico• Into manufacturing sector, the automotive industry is the

second GDP generator.

Source: INEGI – Sistema de Cuentas Nacionales. 5

Share manufacturing industry GDP 1993 2000 2005 2014 2015

Percentages 100.0 100.0 100.0 100.0 100.0Agroindustry 24.1 20.2 22.7 23.6 22.6Automotive industry 11.2 13.5 12.1 16.9 18.3Chemistry industry 9.4 11.1 12.6 11.6 9.0Basic metal industry 3.3 4.5 6.4 5.8 5.4Beverages and tobacco industries 4.5 4.7 5.5 5.1 5.2

Other industries 47.5 46.0 40.7 37.0 39.6

The automotive industry employs 730,923 people

directly, representing

14.4% of total manufacturing

sector employment.

Source: INEGI – Censos Económicos 2014. 6

Agroindustry17.3%

Automotive industry

14.4%

Metal products

7.7%Clothing

5.9%

Other industries

54.6%

Manufacturing sector employment 2014

Automotive industryexports importance

7

Automotive industry exports represent more than oil products exports, remittances income and tourism income together.

27,877

9,704

15,390

11,879

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2013 2014 2015 2016

Mill

ones

de

dóla

res

January - JulyAutomotive industry Oil products Remittances Tourism income

Fuente: elaborado por AMIA, con datos de INEGI - Grupo de Trabajo de Estadísticas de Comercio Exterior, integrado por el Banco de México, INEGI, Servicio de Administración Tributaria y la Secretaría de Economía.* Se considera Industria Automotriz: 87.01.20 Tractores de carretera para semirremolques; 87.02 Vehículos automóviles para el transporte => 10 personas; 87.03 Automóviles tipo turismo; 87.04 Vehículos para transporte de mercancías; 87.05 Automóviles para usos especiales; 87.06 Chasises con motor; 87.07 Carrocerías ; 87.08 Partes y accesorios de vehículos; 87.11 Motocicletas

Automotive industryexports in the world

8

During 2014 Mexico was the 4th largest exporter in the world, above counties like Canada and Korea.

Production value

9

55.4%national production

Source: INEGI.

28.8%26.6%

44.6%

Added value Domestic inputs Imported inputs

Vehicles and trucks production

Mexico’s production of vehicles by state

10

Railway Sistem

Source: Secretaría de Comunicaciones y Transportes. 11

Source: MIT Observatory of Economic Complexity. 12

Mexican exports by railway system2014 value

Automotiveindustry:

22%

13Source: Secretaría de Comunicaciones y Transportes.

Vehicles trade throughmaritime ports (January-July 2016) Export Import

246,458vehicles

53,720vehicles

40,115vehicles

27,722vehicles

186,010vehicles

101,176vehicles

National Ports System

5,914

26,9021,257

NAFTA vehicle production

• From 1994 to 2015 production vehicle of NAFTA región increased 14.5%.

14Fuente: elaborado por AMIA con datos de Ward’s Automotive y OICA. Data in vehicle units.

Canada15%(2.32

million)

United State78%(12.24 million)

Mexico7%

(1.12 million)

1994

NAFTA: 15.68 million vehicles.

Canada13%(2.28

million)

United State67%(12.10 million)

Mexico20%(3.57

million)

2015

NAFTA: 17.95 million vehicles.

15

Vehicle production in theworld

Fuente: elaborado por AMIA con datos de OICA.

Light vehicles productionand forecast 2020

16Fuente: 2000 a 2015 registro de AMIA. 2016^ a 2020^ corresponde a estimación de la asociación suponiendo una tasa de crecimientodel 3% y con base en los anuncios publicados.

1.9 1.8 1.81.5 1.5 1.6

2.0 2.0 2.1

1.5

2.32.6

2.9 2.93.2

3.4 3.5

4.0

4.44.6

5.1

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

^

2017

^

2018

^

2019

^

2020

^

Mill

ion

units

Considering new investments, our forecast is thatMexico will be producing more than 5 million vehicles in2020 (hard forecast)

17

Canada13%(2.3

million)

United States60%(12.1

million)

Mexico27%(5.1

million)

2020(estimated*)

* Assuming that United States and Canada maintain the same production level of 2015.

Canada13%(2.28

million)

United State67%(12.10 million)

Mexico20%(3.57

million)

2015

NAFTA: 17.95 million vehicles.

18.0%

21.0%

24.0%

27.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

México ~ MexLinear (México) Linear (~ Mex)

México(1994-2015)

México(forecast

2016-2020)

Mexico has increased 12.7% its share in NAFTA production during the last 21 years.

18* Assuming that United States and Canada maintain the same production level of 2014.

2016

2020

With an increase to 5.1 million vehicles in

next 5 years, Mexico could increase its

share by 6.2%.

… and the opportunity in the supply chain

19

Market value and investmentopportunity in the supply chain in Mexico

• 74% of total demand for processes is imported, therefore, there are huge investment opportunities for foreign companies.

• The most demanded processes are stamping, foundry, forging , machining, plastic injection and casting.

Source: PROMEXICO. The Auto Parts Industry, Business Intelligence Unit.

PROMEXICO’s calculations.Data in billions of dollars.

20

Domestic Market

21

Mexican domestic market

• New vehicle sales keep its growing up trend. September 2016 sales stand as thebest this month as well as January-September.

1,13

9,71

8

1,13

5,40

9

1,35

1,64

8

944,

907

1,11

9,10

6

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,00019

90

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Jan-

Sep

201

5

Jan-

Sep

201

6

Uni

dade

s de

veh

ícul

os li

gero

s

+ 18.4%

22

Source: AMIA, con datos de sus asociados.

Similar countries

23

Source: ACARA, AMIA, ANAC, ANFAVEA.

0.0

5.0

10.0

15.0

20.0

25.0

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Argentina Brazil Chile Mexico

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

*

Argentina Brazil Chile Mexico

Light vehicles salesfor each 1,000 people

GDP per capita(constant US$, 2005)

Source: World Bank.* 2014 se estima con publicación del FMI.

source: ADEFA, ANAC, ANFAVEA y AMIA.* Light vehicle units.

Brazil Mexico Argentina Chile ColombiaJanuary - August

2015 1,691,804 833,577 388,804 177,114 185,531

January - August2016 1,305,562 987,663 462,834 187,219 157,231

change -22.8% 18.5% 19.0% 5.7% -15.3%

Imported used vehicles

24

Source: AMIA with data from SAT - Administración General de Aduanas..* Claves de documento consideradas: Zona Fronteriza: C1,C2 y VF, Resto del país: A1, A3 y VU.

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Jan-Aug2015

Jan-Aug2016

Borderland rest of the country

Used vehicles imports decreased 60.6% during 2015 and the first eight mothsof 2016 it decreased 5.8%.

Credit sales

25* Nota: considera la mayoría de las instituciones crediticias.Fuente: AMIA y AMDA con datos de JATO Dynamics.

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Thou

sand

sun

its

January - June

New vehicle sales Sales of new vehicles through credit *

At least 65.8% of January –June new vehicles sales were sold through credit.

Research and development in the automotive industry

26

Automotive Industry Group ofUniversities and Research Centers

27Source: AMIA.

1. Human resources

3. Infrastructure

4. Collaborative projects

5. Government incentives

6. Legislative agenda

¡ T H A N K Y O U !Eduardo J. Solís Sánchez

Executive President

Mexican Automotive Industry Association

+52 (55) 5272-1144

esolis@amia.com.mx

28

@AmiaMexico

Asociación Mexicana de laIndustria Automotriz ac