Automotive exports to Mexico Jaguar Land Rover, Birmingham 18 May 2015.

Automotive exports to Mexico

Jaguar Land Rover, Birmingham18 May 2015

Welcome

• Mario Gonzáles Alvarez, Director for Trade & Investment, ProMexco

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Support to internationalise your business

• The Rt Hon Francis Maude, Minister of State for Trade & Investment


The automotive sector in Mexico, key facts and trends

• Oscar Albin, CEO, Mexican Autoparts Association (INA)


Industria Nacional De Autopartes, A.C.

INA

VISION:

Being the most important Organization representing companies in the automotive parts sector with manufacturing interests in Mexico.

MISSION:

Supporting growth and sustainable development of its members through the promotion of the global market and manufacturing of automotive and auto parts industry in Mexico.

GOAL:

Leaning on the importance of the sector and the companies that comprise it, to achieve the best representation with government authorities (with special emphasis on the federal government), the automotive sector, academia and society in order to promote growth and development of auto

parts industry in Mexico.

5


We group the largest Automotive parts manufacturers worldwide with presence in Mexico.

LIGHT COMMERCIAL VEHICLE

AFTERMARKET

HEAVY COMMERCIAL VEHICLES

AFFILIATES, NON-AUTOMOTIVE

INA MEMBERS


Production of vehicles in the World, 1997-2021

Source: IHS Global Insight

Annual average rate of growth , 2014-2021Global Markets 2.8%

Developing Markets 4.8%


Production Export/Domestic Market Ratio, 2014

Mexico exports 79% of its vehicle production production.

Source: INA with information from OICA, ANFAVEA and AMIA


*From 1997- 2013 data from AMIA for Mexico and OICA for USA and Canada. From 2014- 2019 forecast from IHS Global Insight.Source: INA with information from AMIA, IHS Global Insight and OICA

Light Vehicle Production in NAFTA Region

EUA 63%

Canadá 10%

México 27%

NAFTA = 18.6 Millones de unidades

Mexico 10% Mexico 17%


Production of light vehicles in Mexico2002-2021

Source: INA with information from AMIA

+ 50%


Source: INA with information from AMIA

Total 1,312

Total 2,642.9

85%

71%

10%

9%4%6%

15%

Exports of light vehicles per region2002 vs 2014


Forecast of Light Vehicle Production in México, 2015-2021

Source: INA with information from IHS Global Insight

OEM 2015 2016 2017 2018 2019 2020 2021Renault/Nissan 803,325 795,711 822,077 859,253 861,650 844,584 824,347General Motors 654,841 627,766 773,364 819,669 867,189 861,334 870,586Volkswagen 452,899 450,970 514,376 586,635 615,412 625,807 613,499FIAT Chrysler Automobile 469,929 481,498 581,483 595,874 587,610 566,631 555,220Ford 427,206 449,482 439,097 407,071 501,749 541,400 544,602Honda 245,967 223,097 220,450 252,805 253,958 259,817 287,385Toyota* 101,817 135,465 124,155 138,661 245,558 244,025 250,826KIA 172,299 213,495 242,092 241,714 230,730Mazda 193,462 198,920 206,729 209,126 201,465 225,288 229,781Mercedes-Benz** 18,956 81,680 110,515 165,377 161,737BMW 44,431 88,538 155,084Audi 60,577 147,213 155,777 152,405 144,417 138,384Infiniti** 1,673 48,025 60,217 103,238 102,779 96,954Total 3,349,446 3,425,159 4,068,224 4,380,263 4,787,272 4,911,711 4,959,135*It includes production which is made on the plant of Mazda in Salamanca

** The production will take place at the Nissan plant in Aguascalientes

Forecast of production of light vehicles in Mexico, 2015-2021(Units)


Production and exports of heavy vehicles, 2000-2014

Source: ANPACT

+ 60%


2.1 Mexico Auto Parts Perspectives


Auto parts manufacturers located in Mexico The location of the most important auto parts around the world strengthens

Mexican productive chain.

Example of auto parts manufacturers in Mexico

29%

27%18%

4%4%

19%

Origin of the auto parts manufacturers located in Mexico

USAJapanGermanyFranceSouth CoreaOther

Source: ProMéxico


Production of auto parts per country, 2014 In 2014 Mexico was the sixth largest producer in the world of auto

parts with 81.4 million dollars

Fuente: ProMéxico con información de Global Insight e INEGI.

Chin

a

Japa

n

USA

Ger

man

y

Sout

h Ko

rea

Mex

ico

Mex

ico

Braz

il

Cana

da

Indi

a

Thai

land

Czec

h

Repu

blic

Forecast to 2015 is 85.5 billion dollars

Manzanillo

14.2%18.7%

10.3%

3.1%

1.4%

5.5%

6.7%5.6%

Bajío Zone 28.1%

Guanajuato Querétaro San Luis Potosí Aguascalientes Jalisco

Northern Border 53.2%

Baja California Sonora Chihuahua Coahuila Nuevo Leon Tamaulipas

Fuente: INA con información de EMIM de INEGI, incluye maquila

Lázaro Cárdenas

Tampico

Altamira

Tuxpan

Veracruz

Auto Parts Production per State, 2014 (includes engines and transmissions)


Mexican Exports & Imports of Auto Parts per Country, 2014

Source: Global Trade Atlas

Country Exports % Country Imports %USA 58,390 90.1% USA 22,370 54.6%Canada 1,470 2.7% China 5,409 11.7%Brazil 839 1.4% Japan 2,697 6.1%China 680 0.7% Canada 1,927 4.6%Germany 372 0.7% Germany 1,854 4.5%United Kingdom 349 0.4% South Korea 1,848 4.3%Japan 263 0.3% Brazil 548 1.6%South Korea 191 0.3% Taiwan 544 1.4%Spain 140 0.3% Nicaragua 496 1.3%Nicaragua 130 0.3% Thailand 393 1.1%Australia 126 0.2% Italy 379 0.9%Rusia 126 0.2% India 334 0.8%Thailand 112 0.2% France 332 0.8%Argentina 107 0.2% Spain 308 0.8%Colombia 93 0.2% Zcech Republic 236 0.5%

Total 64,527 100% Total 41,992 100%

Trade Balance 22,535

Mexican exports and imports of auto parts, 2014 (millones de dólares)

Balance Trade of Auto Parts, 2014 (millon dollars)


Main Auto Parts Exported, 2014

Source: INA with information from Global Trade Atlas

Auto parts 2013 2014 Growth (%)Harnesses and cables 7,071 7,866 11%Seats for vehicles and its parts 4,531 5,440 20%Engines 4,188 4,602 10%Parts, stamped parts and accessories of bodies 2,582 2,794 8%Differential axles and its parts 1,950 2,232 14%Air bags and its parts 1,997 2,182 9%Air conditioning devices 1,253 1,733 38%Devices for audio and video 1,483 1,717 16%Automatic regulation or control instruments 1,297 1,496 15%Selected auto parts 26,352 30,061 14%Total 57,696 64,527 12%Source: INA with information from Global Trade Atlas

Main auto parts exported by Mexico, 2013-2014 (million dollars)


Main Auto Parts Imported, 2014

Source: INA with information from Global Trade Atlas

Auto parts 2013 2014 Growth (%)Components for harnesses 2,690 2,622 -3%Parts, stamped parts and accessories of bodies 1,743 1,984 14%Engines and its parts 1,773 1,742 -2%Devices for audio and video 1,488 1,547 4%Seats for vehicles and its parts 1,222 1,418 16%Air bags and its parts 1,032 1,114 8%Automatic gearboxes and its parts 725 953 32%Differential axles and its parts 775 848 9%Tires 511 581 14%Clutch and its parts 516 564 9%Selected autoparts 12,474 13,372 7%Total 38,297 41,992 10%Fuente: INA con información de Global Trade Atlas

Main auto parts imported by Mexico, 2013-2014 (million dollars)


Program Vision

Reach a domestic market size of new vehicles that promotes new investments in the sector.

Turn Mexico to the top three world destinations for design and vehicle manufacturing, as well as auto parts and components.

2020

• The vision of the Mexican Automotive Industry is integrated by two main axes:


Pillars of the Program

STRATEGIC PROGRAM OF THE

AUTOMOTIVE INDUSTRY

1. Strengthening of the domestic market

2. Improve the business environment for the Automotive Industry

3. Access to foreign markets

4. Research, technological development and innovation

• It was agreed to work on 4 pillars :


Thank You

Ing. Oscar AlbinPresident

Industria Nacional de [email protected]

Opportunities for UK companies in Mexico

• Carlos Botello, UKTI Mexico Embassy


Opportunities for UK Companies in Mexico

Automotive Sector May 2015

DUAL YEAR MEXICO AND THE UK

26

UK’s Exports to Mexico Value £

Road Vehicles 117,601,054

Beverages 104,578,486

Power generating machinery & equipment 104,111,264

Medicinal & Pharmaceutical products 83,260,243

General industrial machinery & equipment 53,832,103

Other transport equipment 39,559,018

Miscellaneous manufactured articles 37,064,239

Mexico – Business Overview27

UK-Mexico bilateral trade (2014)TRADE BALANCE FOR THE UK

UK Exports to Mexico (2013) £ 1,038 M

UK Imports from Mexico £ 1,087 M

UK-Mexico: a growing relationship

Mexico – Business Overview 28


UK-Mexico bilateral trade

+400 British companies and 900 with British capital are successfully trading and expanding in Mexico (multinationals, mid-corp and SMEs).

Mexico is a “top priority emerging economy”: key potential market as identified by British businesses.

The UK has been the 5th largest investor in Mexico over the past 10 years.



UK Exports to Mexico: Forecasts for 2020

1. UK exports to Mexico are projected to increase to over £5.5bn by 2020. Key sectors which are critical to driving success are: machinery and electrical products, financial services, business services, pharmaceutical products, food and beverages, road vehicles and travel services.

2. While services look set to remain a small part of the Mexican import market, their projected growth will offer opportunities to UK services exporters. Services import demand should increase to serve the growing middle class and meet rising demand in developing sectors such as financial services. This is important given UK strength in services.


UK investments in Mexico

Export opportunities: the Mexican Automotive Industry

32

Monterrey Plant 2016

Aguascalientes Plant 2017

Aguascalientes Plant 2018

Light Vehicles Commercial Vehicles

OEM Plants in Mexico

Mexico – Business Overview

Source: INA with information from INEGI, AMIA and IHS Global Insight

Auto Parts Production


34

Where is the main Opportunity?

At the Tier 2 Level


35

Trade with the USA and the World Trade with other Countries

USA Others0

10000

20000

30000

40000

50000

60000

ExportsImports

Canad

aBraz

il

German

yChina

Japan

South Korea

Thail

and

Nicarag

uaIta

ly

Others0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

ExportsImports

Mainly Tier 1 Components Mainly Tier 2 Components

Source: INA

Mexican Autoparts Exports and Imports


36

1. 19 Light Vehicle Plants 2. 10 Heavy Vehicle Plants3. +400 Tier 1 Plants4. +1000 Tier 2 Companies

But…

The number of Tier 2 companies is not enough

The Local content of the Tier 1 components varies from 10% to 30%

What is the Situation?


Mexico – Business Overview37

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Bill

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Total market value and business opportunity in the supply chain for the Mexican automotive industry (billion dollars)

*Level of demand not produced in Mexico

18.1

13.2

11.5

Top Ten85%

AutomotiveSupply Chain Gaps and Business Opportunities

38

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Total market value and business opportunity in the supply chain for the Mexican automotive industry (billion dollars)

*Level of demand not produced in Mexico

Investment opportunities regarding the demand of processes lacking in the supply chain

Processes with low or non-existing production in the Mexican automotive supply chain

Processes Processes

1. Cold & hot forging parts 11. External Plastic Chroming

2. Extrusion of polymers with metallic insertions 12. High volume sintering

3. Flocking finishing 13. Dies and mould carrier for body parts

4. Aluminum Die Casting higher to 450 tons 14. Progressive dies

5. High Strength Steel 15. Manufacturing of molds for plastics

6. Stainless Steel 16. Manufacturing of molds for Die Casting

7. Steel Casting 17. Fiberglass parts

8. Stainless Steel Casting 18. Blow molding (with or without paint)

9. Precision Stamping 19. Assembly or manufacture of sensors and electronic components

10. Deep Stamping

There are other specific industrial processes which are highly demanded by the automotive industry in Mexico.

Other Investment opportunities regarding current processes lacking in the supply chain

• 32 professional advisors -

organised in sector teams

• Main office located in the British

Embassy in Mexico City, and 3

regional commercial offices:

• Guadalajara

• Monterrey

• Tijuana

40Mexico – Business Overview

UKTI Mexico

• Strategic relationships with government partners, key stakeholders

(ProMexico, British Chamber of Commerce, COMCE) and British

companies already established in the market

• Dedicated Marketing and Press team which can support with different

services: press releases and conferences, interviews, design, article

placement and event organisation

• GREAT Britain Campaign

• UKTI Mexico supported over 1000 UK companies in 2013. Approximately 50% of

companies supported do business in Mexico.

41Mexico – Business Overview

UKTI Mexico


42

HUGE COUNTRY

CulturalRichness

A HingeState

With 14 FTAs with countries ranging from the US and Canada to the EU and Japan, Mexico is one of the countries mostopen to foreign trade in the World.

Openness

A country of tradition and cultural richness, Mexico mixes cultural traits of European and Amerindian descent.

Mexico is a bridge between two regions: North and South America.It unites characteristicsof both of them.

Mexico’s almost 2 million square km. This results in natural resources as well as a 3,145 km border with the US.


Carlos BotelloSenior Trade Officer – UKTI [email protected] 2015

Regulations & tax considerations

• James Andrews and Kirsty Millyard, KPMG


Trading with Mexico – Navigating the tax landscape

James AndrewsKirsty Millyard

18 May 2015

46© 2015 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Trading with Mexico – Navigating the tax landscapeAgenda

TRADING WITHIN MEXICO

ESTABLISHING MEXICAN

OPERATIONSIMPORTING INTO

MEXICO

CORPORATE TAX

VATCUSTOMS DUTY

EMPLOYMENT TAX


Trading with Mexico – Navigating the tax landscapeImporting into Mexico




MEXICO

VATCUSTOMS DUTY

EMPLOYMENT TAXCORPORATE

TAX


Import checklist

Pedimento

COVE

Bill of lading

Shipping manifest

Certificate of origin

etc..

Trading with Mexico – Navigating the tax landscapeCustoms duties

Import Taxes

• General import/export duty (IGI/IGE)

• Import/export declaration (Pedimento) –

$267 pesos (c.£12/€15)

• Customs Processing Fee – 0.8%

• Tax on new vehicles (ISAN)

• Value Added Tax (IVA) – 16%

$

Padrón de Importadores

Free Trade Agreements

• NAFTA• EU• Latin America• Asia Pacific


Trading with Mexico – Navigating the tax landscapeTrading within Mexico




MEXICO

VATCUSTOMS DUTY


TAX


Trading with Mexico – Navigating the tax landscapeCreating a taxable presence

Dependent agent

Fixed place of business(including construction/installation)

Key indicators

Representative offices, liaison offices, scientific offices, or other similar establishments;

Mobile staff or executives, including formal and informal secondments;

Use of local agents/distributors;

Use of local consultants;

Overseas employees/contractors;

E-trading;

Storage of goods locally;

Making sales in territory;

Making other local filings (e.g. VAT, payroll tax, social security, etc.).

Corporate tax

Registration requirements

Reporting requirements

Personal tax


Trading with Mexico – Navigating the tax landscapeEstablishing Mexican operations




MEXICO

VATCUSTOMS DUTY


TAX


Trading with Mexico – Navigating the tax landscapeEstablishing a business in Mexico – tax considerations

Legal form

Personal tax

Subsidies

Corporate tax

VAT

Employee profit

sharing

Withholding tax

IMMEXMaquiladora

Program


Trading with Mexico – Navigating the tax landscapeFurther details

Contact details Further information

KPMG in Mexico

https://www.kpmg.com/mx/en/pages/default.aspx

Investing in Mexico

https://www.kpmg.com/MX/en/IssuesAndInsights/ArticlesPublications/Pages/Investment-in-Mexico-2014.aspx

James AndrewsTransfer Pricing Senior ManagerT: 0121 335 2740M: 07770 703326E: [email protected]

Kirsty MillyardTransfer Pricing Assistant ManagerT: 0121 232 3472M: 07917 373632E: [email protected]







The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

© 2015 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Q&A SessionTo edit click View>Header and Footer 55

Doing business in Mexico: Q&A panel

• Chair: Luke Hampton, Supply Chain Development Manager, SMMT

• Brian Reilly, Head of Sales, GSM• Jonathan Dennison, Head of Government Relations, GKN• Oscar Albin, CEO, Mexican Autoparts Association (INA)• Carlos Botello UKTI Mexico Embassy


Tools for international business

• Mike Gahir, Regional Director, Santander


Thank you for attending, the event will continue with a networking lunch

Automotive exports to Mexico Jaguar Land Rover, Birmingham 18 May 2015.

Documents

production of auto parts

amia industria nacional

promxico industria nacional

mexico exports

automotive parts sector

world of auto parts

vehicle production production

production of vehicles