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Trucking a dominant force in Mexico

Posted: November 30, 2017 by John G. Smith

PUERTO VALLARTA, MX – In Mexico, there is an undeniable link between trucking and the North American Free Trade Agreement (NAFTA).

The nation is now the eighth-largest producer of trucks in the world; the fourth-largest exporter of the vehicles. And related exports now represent 6.3% of the country’s Gross Domestic Product, says Flavio Rivera, president and Chief Executive Officer of Daimler Trucks Mexico.

The nation’s manufacturing facilities produced 191,000 heavy duty vehicles in 2015 alone, with 151,000 built in 2016. Daimler itself has plants in Santiago Tianguistenco, State of Mexico, and Santillo, Coahuila.

Manufacturing in general has been bolstered by free trade agreements with 46 countries, and 80% of available freight now moves by truck as well. Indeed, gone are the days when oil exports dominated the domestic economy.

“The presence of the trucking industry in Mexico has been gaining ground,” Rivera said, during a broad-ranging discussion with industry media in Puerto Vallarta. “All those [manufactured] goods are absolutely moving by trucks.”

Still, Daimler is offering no official comment about ongoing negotiations around the all-important trade deal. The public focus is on business as usual. “We are continuing producing trucks. We are continuing operating efficient factories,” said Rivera. “The manufacturing plants today are in very good shape. Very modern.”

As much as Mexico manufacturing activities play a role in the trucks seen in Canada and the U.S., the country is clearly a unique market in its own right. Buyers there can choose from no fewer than 13 different nameplates. “They are Asian, they are European, they are of course North American,” he said of the manufacturers with a presence.

Daimler accounts for 39% of the sales, based on October’s year-to-date figures. But one in every five trucks sold in Mexico is also a cabover, as buyers look for options that will work on congested and narrow roads, particularly when supporting so-called “last mile” deliveries.

Daimler has responded to the growing interest in cabovers by unveiling the Class 8 Freightliner 2528 and Class 6 1217, during the recent Expo Transporte trade show in Guadalajara. In the Class 6 segment alone, Freightliner already accounts for 36.9% of sales, compared to Isuzu’s 31% and Hino’s 23%, even though the latter two already had cabover trucks available. The new Freightliner 1217 will “compete aggressively” against those brands, he said.

Mexico’s truck market saw 26,028 Class 4-8 trucks sold as of October. But it is also characterized by aging equipment, with the average truck now 18 years old. “That is a very bad number,” Rivera said, referring to the need for government incentives to adopt newer technology.

The country’s buyers tend to be sensitive about purchase price, too, so Daimler dealers have an important role to play in teaching people about the true cost of operating trucks he said.

“Our dealer network is stronger, it is larger, and it is well prepared to attend customer necessities. Some other brands they don’t have a presence in many, many cities,” he added, suggesting Freightliner has effectively covered the country. In the last year alone, they have invested about US $5.4 million in new facilities or expanded capacity.

There are economic headwinds to overcome, though. With the exception of plans for a new airport in Mexico City and an expanding rail network, infrastructure-related investments could improve, he said.

Mexico is also preparing to introduce Euro 5 emission standards in January 2018, and that will require a stable supply of Ultra Low Sulfur Diesel – a fuel that’s commonplace in Canada, but rare in most areas of Mexico.

“That is going to be a very challenging time,” he said. “We are looking forward to becoming the pacemakers of the industry.”

 

 

 

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