Tire Business staff report
NEW YORK — Booming automotive production, rising vehicle sales and growth in Mexico's infrastructure sector are combining to spur the growth of the country's tire market through 2021.
According to a new report — “Mexico Tire Market Forecast and Opportunities, 2021” — from New York-based TechSci Research, Mexico's tire market is forecast to grow at a Compound Annual Growth Rate (CAGR) of more than 10 percent during the period from 2016 to 2021.
TechSci is a research-based management consulting firm that provides market research and advisory solutions on a range of industries to customers worldwide.
The company tabbed the tire market growth in Mexico to “easy availability of cheap labor, strong domestic automobile demand and favorable tax policies” that are fueling Mexico's automotive industry, consequently boosting demand for tires in the country.
“This growth in the country's tire market can be attributed to the planned capacity expansions of major automobile OEMs coupled with a rapidly expanding automobile fleet in the country,” TechSci said.
The firm added that an overall investment of $596 billion (U.S. dollars) under the National Infrastructure Program by Mexico's federal government is another factor driving growth in the country's automobile as well as tire markets.
Mexico houses some of the major global automobile manufacturers — such as Toyota Motor Corp.; Ford Motor Co.; Fiat Chrysler Automobiles; General Motors Co.; Mercedes Benz; Kenworth, a PACCAR Inc. company; Freightliner Trucks, a division of Daimler Trucks North America; International Truck and Engine Corp.; MAN Truck & Bus A.G.; Volkswagen A.G.; and Swedish vehicle maker Scania A.B. — that are involved in producing passenger cars, light trucks as well as heavy trucks and buses, according to TechSci.
Automobile sales in Mexico exhibited a CAGR of around 9.6 percent from 2011 to 2015, the firm said, with automobile unit sales increasing from 0.94 million units in 2011 to 1.35 million units in 2015. That resulted in expansion of the country's automotive fleet from 33.28 million units in 2011 to 37.10 million units in 2015, according to TechSci.
“The expanding vehicle fleet size subsequently boosted demand for tires from the replacement segment as well during 2011 to 2015,” the company said. “A similar trend is expected to be witnessed during the forecast period as well, both in the OEM as well as replacement segments, consequent to which, Mexico's tire market is poised to witness considerable growth during 2016-2021.”
As of 2015, TechSci noted that the Mexico tire market was dominated by the passenger car tire segment, in volume terms, followed by the light commercial vehicle tire segment. On account of the increase in production and sales of passenger cars, the passenger car tire segment “is expected to remain the largest contributor in the country's tire market over the next five years,” the firm forecast.