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Mexican light-vehicle sales decline 5.4 percent in November
Mexico's light-vehicle sales reached 133,791 units in November, according to initial data released by the National Institute of Statistics and Geography (Instituto Nacional de Estadistica y Geografia: Inegi). Compared with the figure reported for November 2017 by the Mexican Automotive Industry Association (Asociación Mexicana de La Industria Automotriz: AMIA), light-vehicle sales declined 5.4% year on year (y/y) last month. After a 4.6% fall in 2017, Mexican light-vehicle sales have continued to decline throughout most of 2018. Mexican light-vehicle sales were being affected by uncertainty over the renegotiation of the North American Free Trade Agreement (NAFTA) between Mexico, Canada, and the United States, although at the end of September the three countries reached an agreement, which has been signed by leaders of all three countries and now must be ratified by the governments of all three countries. At a brand level, Nissan continued to lead the Mexican market in November, with 28,505 units sold (Infiniti sold 158 units), a 14.3% y/y decline. Nissan was followed by General Motors at 24,174 units (down 4.4%), with Volkswagen in third place at 19,005 units (down 6.1%).
Significance: In 2017, Mexican light-vehicle sales suffered a steeper decline than initially expected, and the latest IHS Markit forecast for the sales in 2018 sees a decrease of about 6.2% to 1.44 million units, though this is forecasted to be followed by an increase of 3.2% in 2019. Market conditions worsened this year as the slow resolution of the NAFTA negotiations fed into the volatility of the Mexican peso against other currencies, as well as into higher inflation rates, which affect disposable income and make cars more expensive. In the context of higher inflation, the level of interest rates is hitting vehicle affordability on two fronts. Lastly, the political impact of the mid-2018 presidential election affected vehicle sales in the first half of the year. As a result, although we originally expected that increased competition would allow continued sales growth, we now expect sales to flatten out and decline in 2018. A detailed report on the November light-vehicle sales results will follow when the full data on sales, production, and exports are available.
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