Mexico Automotive Summit 2021 Echo

IMPACT REPORT

Networking Sponsor

Gold Sponsors

Silver Sponsors

The automotive sector is adapting to one challenge after another.

Companies in Mexico first secured their operations thus preventing any risks to their employees. Then, af ter a historic hiccup in Mexican production, operations slowly resumed only to face a shortage of critical supplies, from semiconductors to plastic injection parts. Now, companies in Nor th America are facing logistics constraints when bringing components from Asia as container prices have skyrocketed.

The immediate challenges, however, do not faze OEMs from their needed transformation from car manufacturers to mobility providers. Connected, autonomous, shared and electric vehicles are strongly influencing manufacturing operations, driving material technology innovations and strengthening Industry 4.0 capabilities. Get to know the shortcomings and opportunities in the sector directly from those shaping its future at Mexico Automotive Summit Echo.

4

C on f e r ence I m p act How would you rate the quality of the conference program and speakers?

111

companies

196

Breakdown by job title

6%

Greatly exceeds expectations 39% Exceeds expectations 50% Meets expectations 6% Below expectations

conference participants

55

speakers 4%

7

sponsors

Conference social media impact 4,949 direct impressions during MBF

3,050

visitors to the conference website

Pre-conference social media impact 10,494 direct pre-conference LinkedIn impressions

2.97% click through rate during MBF

3.70% pre-conference click through rate

5.82% conference engagement rate

7.30% pre-conference engagement rate

President/Board member/Partner 14% CEO/CFO/COO/ Director General/ Country Manager 19% VP/Director 29% Plant Manager/ Manager 2% Purchasing Manager/Director 9% Sales Manager / Sales Director 14% Engineer/Analyst 5% Coordinator 4% Associate

Mexico’s leading B2B conference organizer introduces the world’s leading event networking platform.

Delivering intent-based matchmaking powered by Artificial Intelligence that connects the right people.

Network, no matter where you are.

196

participants

How would you rate the quality of the matchmaking on Brella?

Matchmaking intentions

957

matchmaking communications

95

1:1 meetings conducted

17% Exceeds expectations 67% Meets expectations 17% Below expectations

773 Trading Total

1,414

31 Recruitment 186 Investment

5

C om p an y Attendance •

3C Metrology SA de CV

•

Jaguar Land Rover

•

ABB

•

KASO & ASOCIADOS SA DE CV

•

ALD Automotive

•

Kia Mexico

•

ALT Technologies

•

Kikoya

•

AMDA

•

KPMG

•

American Industries

•

Lavartex

•

AMN International

•

LeasePlan Mexico

•

Arbomex

•

MAN Truck & Bus México

•

ARIDRA

•

MAZDA MEXICO

•

Auto Cluster

•

Mercado Libre México

•

Autocluster del Estado de Chihuahua

•

Mexicircutor SA de CV

•

Automated Logistics System, LLC

•

Mexico Business

•

Automotive Cluster of San Luis Potosí

•

MexicoView

•

AWS

•

Michelin

•

BCW

•

Minsait

•

BHTC México S.A. de C.V.

•

Mitsubishi Motors

•

Bosch Mexico

•

MOLD SERVICE

•

CANACINTRA PUEBLA

•

MUBEA

•

Circutor

•

Nemak

•

Clauteodmex

•

Netcon

•

CLAUZ

•

Neuron Business Group

•

Cluster Automotriz de Nuevo León AC

•

Newlink México

•

Clúster Automotriz Zona Centro

•

Nissan Mexicana

•

Clusther Automotiz Ags

•

PELT

•

COFOCE

•

PPG

•

Creative Foam de México, S. de R.L. de C.V.

•

Qualcomm

•

Cuadrante

•

Rassini

•

Daimler

•

•

DHLSC

•

Distribuidores del Istmo

•

RER Energy Group

•

DuPont Latin America

•

Robert Bosch Mexico

•

E-DRIVE

•

Rockwell Automation

•

Enel Energia

•

SAMES KREMLIN

•

Evonik Industries de Mexico SA de CV

•

SAP

•

EWS LTD MX

•

Scania

Red Nacional de Clusters de la Industria Automotriz, A.C.

•

Faurecia

•

Secretaría de Desarrollo Económico de Tamaulipas

•

Financiera Bepensa

•

SKF Mexico

•

FlowSmart

•

Sonavox Mexico

•

Ford Motor Company

•

Spencer Stuart

•

Forefront Power

•

State Government of Baja California

•

Frost & Sullivan

•

Stellantis

•

FUMEC

•

TASSM

•

GED

•

Tecnológico de Monterrey

•

General Motors

•

TIBA MEXICO

•

GML

•

Top Management

•

Gobierno de Ontario, Embajada

•

Toyota

de Canadá en México

•

Traffilog

•

GOBIERNO DEL ESTADO DE PUEBLA

•

UNADM

•

Helmut Fischer

•

Universal Robots

•

Hinduja Tech

•

Vehículo Emblema

•

Hino Motors Sales Mexico

•

Vera & Asociados

•

HK Strategies

•

Volvo

•

Honda de Mexico

•

Von Wobeser y Sierra

•

Iberdrola México

•

Wallenius Wilhelmsen Ocean

•

Industria Nacional de Autopartes AC

•

Warren Automotive de Mexico

•

Infor

•

Yanfeng México

•

Informe Confidencial

6

P r og r am D ay 1

09:00

MEXICO’S AUTOMOTIVE INDUSTRY INVESTMENT OPPORTUNITIES OUTLOOK

Speaker: Iker Jiménez, Director General of Impulso Económico Global 09:30

THE FOUNDATIONS OF THE AUTOMOTIVE INDUSTRY OF THE FUTURE

Moderator: Alejandro Salas, Managing Editor at Mexico Business Panelists: Manuel Montoya, President of the National Automotive Cluster Network

Osvaldo Belmont, Technical Director of AMIA

Alberto Bustamante, Director of INA 10:30

GLOBAL VEHICLE DEMAND OUTLOOK AND SUPPLY CHAIN RESILIENCY

Speaker: Guido Vildozo, Automotive Vice President LATAM of IHS Markit 12:00

MEXICO’S GREEN VEHICLES MANUFACTURING POTENTIAL

Moderator: Elisa Crespo, Executive President at Automotive Cluster of the State of Mexico Panelists: Elias Massri, CEO of Giant Motors Latinoamérica

Nazareth Black, CEO of Zacua Mexico

Mónica Samudio, Country Managing Director of Circutor

Marcelo Ortiz, Global Business Development Director of Nemak

Oswaldo Cacheux, Planning Director of Hino Motors Sales México 13:15

TOWARD A MORE SUSTAINABLE TRANSPORTATION: GREEN HEAVY VEHICLES

Moderator: Miguel Elizalde, President of ANPACT Panelists: Gilberto Ramírez, Director of Strategic Planning & Business Development at Volvo Trucks & Mack Truck

Raúl Rodríguez, Business Transformation Solutions Director of Scania Mexico

Jesus Gomez, Director of Market Development and Product Portfolio at Daimler Trucks Mexico

15:00

TELEMATICS & THE FUTURE OF SMART FLEET MANAGEMENT

Moderator: Israel Escutia, Director General of Invarat México Panelists: Fernando Ardura, Chief Business Officer of Traffilog

Marco Lizarde, Business Unit DHL Consultant at DHL

Kent Bjertrup, Regional Director - Latin America of ALD Automotive

Mauricio Medina, CEO of TIP Mexico 16:00

TECHNOLOGY INFRASTRUCTURE FOR VEHICLE SALES

Moderator: Guillermo Rosales, Deputy General Director at AMDA Panelists: Regina Granados, CEO of LeasePlan

Raul Peñafiel, Director General of Jaguar Land Rover México

Jorge Vallejo, President & CEO of Mitsubishi Motors de México

Miguel Barbeyto, President of Mazda

7

PR O G R A M D AY 2

09:00

TURNING POINT FOR THE AUTOMOTIVE SECTOR

Speaker: Edgar Estrada, Director of Volkswagen Mexico 09:30

NEW INVESTMENTS CONTINUE TO LAND IN THE COUNTRY

Moderator: Florian Hanft, General Manager of Sonavox Mexico Panelists: Lorena Isla, LATAM Director of Frost & Sullivan

Paulina Gonzalez, Monterrey Director of American Industries

Francisco García, Director General of NETCON 10:15

REINFORCING NORTH AMERICA SUPPLY CHAIN

Moderator: Mónica Doger, President of the Automotive Cluster Puelba & Tlaxcala Panelists: Ruben Lostal, Location Manager of MUBEA

Martín Toscano, President of Evonik

Víctor Galvan, Senior Manager at KPMG

Cristobal Magallanes, Automotive Sales Director of SKF 12:00

MATERIAL TECHNOLOGY: ADAPTING TO INDUSTRY NEEDS

Moderator: Luis González, President at Automotive Cluster SLP Panelists: Juan José Zaragoza, President LATAM of DuPont

Adriana Macouzet, Vice President Latin America and General Manager of PPG

Pierre-Louis Dubourdea, President and CEO of Central America and Mexico at Michelin

Elvia Bedolla, Plant Manager at LAVARTEX 13:00

MEXICO, A LAND FOR SUPPLY CHAIN INNOVATION

Moderator: Carlos Canseco, Director of the Queretaro Logistics Cluster Panelists: Karla Góngora, R&D Mexico Director of Faurecia

Eduardo Watty, Sales Vice President Mobility Solutions of Bosch Mexico

Alejandro Rojo, Director of Tecnológico de Monterrey’s Automotive Mechatronics Research Center

René Antaño, Science Director at CIDETEQ 15:00

SEMICONDUCTORS AND VEHICLE CONNECTIVITY

Moderator: Ricardo Anaya, Product Manager at Qualcomm 15:30

NEW INVESTMENTS CONTINUE TO LAND IN THE COUNTRY

Moderator: Sergio Bautista, Robotics Local Business Unit Manager of ABB Panelists: José Riveró, Country Manager of Infor

Javier Vallejo, Senior Manager of Architect Solutions at AWS

Abraham Sosa, Director of Global Accounts in Latin America at Universal Robots.

16:30

SUPPLIERS AND OEMS, PARTNERS IN REACHING CARBON NEUTRALITY

Moderator: Luis Vera, Managing Partner at Vera & Asociados Panelists: Pablo Rivero, Country Manager of Fore Front Power

Ana Núñez, Digital Supply Chain Hub Lead of SAP América Latina

8

C on f e r ence H ighlights ELECTRIFICATION OF THE AUTOMOTIVE SECTOR IS A PRIORITY: SRE The automotive sector has taken center

up since the former North American Free

stage in the transition to clean energy

Trade Agreement (NAFTA).”

a s b o t h c a r m a ke r s a n d g ove r n m e n t institutions work to reduce its carbon

To boost this sector, SRE and the Ministry

footprint. However, achieving this goal

of Economy have created a strategy for

does not depend on the efforts of a few

th e a uto m otive se c to r with th e g o a l

but on all players in the ecosystem, said

of “electrif ying transpor t,” Almícar

Iker Almícar Jiménez Martínez, General

stressed. With the suppor t of the US ,

Director of Global Economic Impulse at

h e adde d , th ese age ncies will create

the Ministry of Foreign Affairs (SRE).

a plan to accelerate the transition to the widespread use of electric vehicles

SRE is focusing on six strategic sectors:

and the transformation of the industry.

mobilit y, a e rospace , h ealth scie nces ,

This plan includes the development of

infrastructure, information technologies

interdisciplinary working groups that will

and automotive. In the latter, SRE has

create transport electrification scenarios,

identified transportation as one of the

assess the challenges involved and present

main sources of greenhouse gas emissions

a roadmap. “This has to be an effort of

in Mexico, leading the country to “face

governments , academia and societ y,”

great challenges in the face of global

Almícar said. “We all have to participate

carbon footprint reduction requirements,”

to be on the same page and make this

said Almícar. “ We have realized that a

transition as smooth as possible.”

rapid transition and a strong transformation a re re q uire d . We wa nt this se c tor to

The creation of strategic value chains, not

become a new one in the next few years.”.

only under the USMCA framework but also at a global level, brings great opportunities for Mexico and the automotive sector,

“We have realized that a rapid transition

said Almícar, adding that the country has

and a strong transformation are required. We

the potential to become a production

want this sector to become a new one in the

and distribution hub. “Today Mexico has

next few years ”

enough strongholds to attract investment.”

Iker Jiménez Director General of Impulso Económico Global

T h e e l e c tr i fi c ati o n s tr ate g y th at th e industry is experiencing in the US also provides a great opportunity for Mexico to create a local value chain in auto parts production and automotive assembly.

Mexico is currently the four th largest automotive manufacturing country in the

“The automotive sector in Mexico has a

world, producing about 20 percent of all

wealth of experience in parts production,

light vehicles in North America. It is also

assembly and distribution of high-quality

the largest contributor to the country’s

vehicles ,” said Almícar. “ We can take

manufacturing GDP at 25 percent,

advantage of the experience we have

accounting for a third of total exports.

acquired and apply it to the new global

“All of these achievements have been built

interests of sustainability.”

MEXICO NEEDS ROADMAP TO REACH THE AUTO SECTOR OF THE FUTURE The automotive sector is still recovering

the supply chain. While the sector endures,

from the pandemic despite the looming

it needs support from all industry players

challenge presented by shortages across

to properly overcome these obstacles.

9

C on f e r ence H ighlights The automotive sector represents only

rely less on certain semiconductors have

a small part of the total semiconductor

impacted the entire supply chain, added

m a r ket b u t u n ex p e c te d d e m a n d h a s

Montoya . Under these circumstances ,

led to shortages across manufacturing

re cove r y of prod uc tion lin es will not

i n d u s t r i e s . O n l y 1 0 p e r c e n t o f to t a l

arrive until 2H22, said Oswaldo Belmont,

semiconductor chips head to the

Technical Director of AMIA.

automotive industry, being the Americas the last region in semiconductor demand,

While the sector is dealing with

according to INA. “Semiconductors for the

semiconductor

automotive sector are manufactured in

also undergoing one of its deepest

five factories, mainly in Asia. The demand

transformations as OEMs shift to CASE

for semiconductors from other devices

mobility. CASE mobility transformation

has risen causing a consequential lack of

re q uire s a u n iq u e s trate gy fo r eve r y

supplies for the automotive sector,” said

stage, explained Belmont, so there is no

Alberto Bustamante, Director of INA.

one-size-fits-all solution. “EV production

shortages,

it

is

is conditioned by bat ter y produc tion Logistic s costs have also driven up a

otherwise there may be more vehicles

shortage of different supplies. “Price of

in global markets. As for connectivity,

containers has risen up to 100 percent per

vehicles will be connec ted to the

container. For instance, from Shanghai to

inf rastru c ture , s ave lives a n d re d u ce

Lo n g B e a ch th e re g ula r cos t ra n g e d

accidents but for vehicle autonomy we

between US$2,000 and US$3,000; now it

need a solid infrastructure. Shared mobility

costs about US$8,000. This has delayed

a l s o d r ive s th e s e c to r to a d i ff e re nt

production globally,” said Bustamante.

paradigm in terms of vehicle ownership and new business models, in which users

“Triple helix collaboration is essential to just not be

can access a vehicle only temporarily.”

a technology importer. Companies in Mexico should work together with local universities in

Another problem to advance electrification

product development. It is also

is poor battery life and high costs, said

important for universities to approach

Montoya. “If the battery technology is not

to companies. Guanajuato, for instance,

sufficiently advanced and has a similar

is inaugurating an Industry 4.0 hub

cost to an ICE vehicle, EV will remain a

hand in hand with the automotive

niche market.” However, these challenges

cluster, which can be effective to

have not stopped electrification as EV

implement such projects at real

sales are experiencing solid growth rates

manufacturing plants”

in Mexico, in some cases growing by over

Manuel Montoya

100 percent, said Bustamante. But for

President of the National Automotive Cluster Network

EVs to truly penetrate the market there must be support from the government.

“Companies should not be driving infrastructure on their own; they need to be sported by government policies and

Manuel M ontoya , President of the

a proactive regulation. The sector needs

Automotive Cluster Network, said that

charging corridors, such as the one in the

even though there are projects to bring

Bajio, built with the support of the federal

semiconductor manufacturing operations

government,” said Bustamante.

to North America, these may take time. “ Semiconductor factories are already

There still a need for regulation cohesive to

building new plants but it is not a simple as

assure competitiveness, said Bustamante.

that; it takes between 18 and 24 months to

“We are fifth largest auto part producer in

ramp up operations,” said Montoya. OEMs

the world with US$94 billion in play. This

production halts or shifts to models that

drives the country to build regulations

10

C on f e r ence H ighlights th at a s su re it s co m p etitive n e s s . T h e

to companies. Guanajuato, for instance, is

automotive sector in Mexico is larger

inaugurating an Industry 4.0 hub hand in

than the oil and gas and remittances

hand with the automotive cluster, which

sectors, even larger than tourism. Millions

c a n b e e ff e c ti ve to i m p l e m e n t s u c h

of families rely on the automotive sector.”

projects at real manufacturing plants,”

A cohesive public policy will serve as a

said Montoya.

roadmap for the sector to embark in the challenges brought by its transformation

The triple helix approach has helped the

while coping with existing challenges, said

auto sector in Mexico succeed. “Success

Bustamante. “From the government side

stories in the automotive sector are based

we need to create coherent public policy

on the triple helix, with human capital

to draft roadmaps for the sector. In terms

answering to the needs of the sector,

of regulations. It should seek for a balance

while companies providing them with job

between cost and benefits. We need to

opportunities with the support of local

acknowledge what other countries do in

governments for new plants arriving to

terms of certifications and homologations

the state. Also, there should be more

and define which are the most important

communication within the academia for a

elements of the sector to regulate.”

larger interaction,” said Belmont.

Collaboration is not restricted to

Solid collaboration has allowed the sector

governments and businesses; academia

to develop suppliers and engineering

a l s o p l a y s a k e y r o l e . “ Tr i p l e h e l i x

centers in Mexico. “The two largest trends

collaboration is essential to just not be

locally are the USMCA and the arrival of

a technology impor ter. Companies in

engineering centers. These centers are

Mexico should work together with local

arriving to Mexico because the country

universities in product development. It is

has engineers. Engineering centers are

also important for universities to approach

bringing more added value,” said Montoya.

MEXICO’S GREEN VEHICLE MANUFACTURING POTENTIAL Driven by the need to reduce its carbon

According to data f rom th e N ational

fo otprint, th e a utom otive in d ustr y is

Institute of Statistic s and G eography

undergoing one of its most significant

(INEGI), during 1H21 , sales of non-

transformations in many years. As supply

connectable hybrid vehicles and electric

chains undergo major disruptions, vehicle

cars increased, said Elisa Crespo Ferrer,

te c h n o l o g i e s evo l ve a n d c o n s u m e r s

Executive President of Cluster Automotriz

change their preferences, the adaptability

Regional Estado de México. Nationally, the

and resilience of companies in the

State of Mexico had the highest number

automotive sector has become essential

of electric vehicle sales during the first

for all players in the ecosystem.

half of the year with 110 transactions.

11

C on f e r ence H ighlights Mexico City comes in second place with

this is less of an issue because the driver is

102 sales, followed by Nuevo Leon with 29

clear about the route, how many kilometers

and Jalisco with 25.

they will drive and where they can charge it,” he explains. Today an electric car can

G iant M otors , which seven years ago

achieve 500 kilometers of range. Another

began a nationwide electrification project

of these misconceptions is that the lack of

in the truck sector, developed the country’s

infrastructure makes it almost impossible to

first all-electric truck twinned with an

own one of these cars and, while “Mexico still

internal combustion engine. “Today we

lags far behind in mobility infrastructure in

have almost 2,000 zero-emission vehicles

comparison to other countries,” the transition

on the road,” said Elias Massri, CEO of

between increased demand for EVs and

Giant Motors. For the company, however,

infrastructure supply will come hand in hand.

this has not been an easy process as it

Currently, most OEMs marketing such cars

started out testing lead-acid batteries and

already include the installation of in-home

worked its way up to the lithium batteries

charging centers, Massri added.

it uses today..

Circutor, a transnational company focused on energy efficiency, currently provides

“Mexico still lags far behind in mobility

about 80 percent of the current market

infrastructure in comparison to other

for EV charging centers in Mexico. Today,

countries,” the transition between

the company is also focusing on battery

increased demand for EVs and

innovation for cars, said Monica Samudio,

infrastructure supply will come hand in

Country Managing Director for Mexico and

hand. Currently, most OEMs marketing

Central America of Circutor.

such cars already include the installation of in-home charging

The price of elec tric vehicles is also

centers”

preventing many consumers from buying

Elias Massri

one. However, Massri explains, it is necessary

CEO of Giant Motors Latinoamérica

to consider that the long-term cost of an EV is much lower compared to that of an internal combustion engine, “starting with the fact that you never have to spend more on fuel.”

In this transition, auto parts suppliers play a key role in supporting OEMs develop

A key step in this transition are hybrid

new technologies. “Resources are not

vehicles, which have been the go-to option

unlimited for anyone and it is necessary to

for consumers just entering this emerging

face these new challenges together and

market, said Oswaldo Cacheux, Planning

on a fast track,” said Marcelo Ortiz, Global

Director of Hino Motors Sales Mexico.

Business Development Director of Nemak.

Currently, the Japanese-based company has

Along with the knowledge that these two

established itself in Mexico as the only brand

industry players can share, Ortiz said that

with this technology for light commercial

blending their networking pool is also a big

vehicles ranging from 4.5 tonnes to 7.2

step towards listening more closely to the

tonnes gross vehicle weight, Cacheux said.

consumer and the entire supply chain to

To date, the brand has sold more than

provide better solutions. “What has made

1,500 units in the Mexican market, with

you successful in the past will not necessarily

particular success among manufacturers

make you prosper in the future,” he said.

and wholesalers of sweets and snacks, dairy products and logistics companies.

The myths surrounding electric vehicles, however, are still present in the market. The

Under these circumstances, resilience

mileage that such a car can achieve is one of

allows companies to overcome the hurdles

them, Massri said. “With commercial vehicles,

that electrification has brought to the

12

C on f e r ence H ighlights market, according to Mexican electric

an electric vehicle works,” said Nazareth

ve hicle m a n uf a c ture r Z a cua . Limite d

Black, CEO of Zacua Mexico. “We always

education regarding clean energy has

approach the consumer through education

not allowed the massification of EVs to

to break down any misconceptions they

accelerate. “Many people do not know how

may have.”

IN THE SHORT TERM, SUPPLY WILL DRIVE DEMAND The automotive industry was hit hard by the

China and the US. However, pandemic-related

COVID-19 pandemic and its negative effects

disruptions and supply chain bottlenecks will

are still expected to continue affecting the

continue impacting the sector for the next 12

sector during 2022. The recovery, expected for

to 18 months.

2023, depends on demand behavior, supply chain resiliency and the changing needs of

T h e i n d u s tr y is m ovi n g fo r wa rd a n d

the market and countries’ regulations. These

a u to m o ti ve i n n ova ti o n s to d ay co m e

trends will shift the approach taken by OEMs

from electronics rather than mechanics.

and the entire value chain across the world,

As automakers speed up toward CASE

according to global analytics firm IHS Markit.

m o b i l i t y, s e m i c o n d u c to r c h i p s h ave become essential. A single alteration in

“We expect a great reset for the industry,

the supply chain could result in a massive

which will be paralyzed depending on how

impact for the entire sector. With 3Q21

many units can be manufactured, not on what

close to its end, semiconductor shortage

consumers want. There are no inventories; it

impact forecast for 2021 is over 10.5 million

will be a great reset. Supply will drive demand,

units globally and 2 million units for North

not the other way around,” said Guido Vildozo,

America, according to Vildozo.

Senior Manager, Americas Light Vehicle Sales Forecasting at IHS Markit.

“When the Delta variant spread across South East Asia, which are Tier 2, Tier 3 and

The industry’s recovery will be guided by the

semiconductor chips suppliers, the problem

supply chain, which has suffered shortages as

got worse because they just entered the

vehicle output levels cannot keep pace. The

stage of lockdowns and the economy

expected global light vehicle sales forecast

shutdown and reopening cycle usually takes

for 2021 is of 80.5 million, said Vildozo,

between 6 and 8 months. Considering that

thanks to the positive effects of vaccination

the shutdowns began in July, the situation

programs and an increase in demand to

will be normalized by the end of 1Q22,

pre-pandemic levels in key markets, such as

limiting 2022’s production,” said Vildozo.

13

C on f e r ence H ighlights Regularizing the value chain is a complex

tendency of combustion engine will now be

challenge considering the pandemic different

negative,” said Vildozo.

progress globally, macroeconomic factors and governments’ decisions. IHS Markit’s

Raw materials and production cycles will be

global light vehicle sales outlook for 2022 has

the main challenges for the coming years.

an 82.62-million-unit base, with 80.62 million

Governments’ decisions and regulations

units with a pessimistic view and 86.46 as

will also set the tone. As years go by,

an optimistic forecast. For North America,

stringency increases. The US President Joe

the outlook ranges from 14.9 to 16 million

Biden set the goal of having 50 percent of

light vehicle sales for 2022. Regularization

EVs by 2030. Regulations could constantly

of the value chain will not arrive until 2H22,

change the approach of the industry, warned

according to the analysis.

Vildozo. However, OEMs make decisions according to their strongest markets. While

A respite might arrive earlier with more

some automakers have a balanced global

semiconductor plants. Technology giant

coverage, others mainly rely on 2 or 3 key

Bosch’s new €1 billion (US$1. 2 billion)

markets, said Vildozo. “We have seen diverse

semiconductor chip plant began operating

announcements by automakers. Volkswagen

in last August. As vehicles get smarter, more

targets full electrification by 2035 due to

semiconductors are needed. “The fact that

its sales footprints in China and the EU,

we actually started to build this plant a

which have strong regulations. Toyota’s

couple of years ago shows that we expected

electrification process is slower due to its

the demand to go up dramatically,” said to

balanced market across the world. However,

CNBC Herald Kroeger, Member of the Bosch

it announced 15 new EVs and millions in

Management Board.

investment,” said Vildozo.

Electrification to Change the Entire Industry

For electrification to happen, customers, OEMs and governments are the three key players. Emerging markets, such as Mexico,

Electrification is the key trend driving the

will move toward a different direction,

automotive industry. While OEMs cannot

according to industry leaders in the country,

approach it in the same way in developed

since there are other priorities to attend before

and emerging markets, there is an aggressive

electrification. Combustion engine vehicles

tendency toward EVs. Between 2018 and

and HEVs are expected to continue having

2028, there will be 241 light vehicle launches,

an important presence in the Mexican market.

according to IHS Markit.

Electrification “is progressing seriously,” Manufacturing of EVs will be completely

said Vildozo. However, considering the

different from traditional combustion

industry’s low profit margins and the high

engine vehicles and processes will also differ

costs of EVs technology, the production

between BEVs, HEVs and PHEVs. “By 2030

volume “will be relatively low initially and

we will have a very different industry, with

OEMs will continue relying on combustion

less platforms and complexity. It will be

e n g i n e ve h i c l e s to g e n e r a te p ro fi t s .

highly electrified, but with a reduced range

Suppliers and consumers will pay the high

of products. In North America, from 2022 the

costs of EVs,” said Vildozo.

14

C on f e r ence H ighlights HEAVY VEHICLES IN THE ROAD TO SUSTAINABILITY Tr a n s p o r t ati o n i s o n e of th e l a rg e s t

has made important advances on BEVs

sources of greenhouse gas emissions in

and FCEVs with powertrain solutions,” said

Mexico, which also has an old vehicle park

Jesús Gómez, Market Development and

with an average age of 19 years; some of

Product Portfolio of Daimler Trucks Mexico.

these vehicles are over 40 years old. The

Daimler is Mexico’s largest heavy vehicle

path toward greener vehicles is already set

producer, exporter and seller. Its goal is to

but

offer a vehicle fleet totally free of carbon

getting

there

relies

on

a

multistakeholder approach, agree OEMs.

emissions by 2039. “ In the meantime, we continue to reduce our energy and

“With many of our products being used for 10 years on average, if we want to reach our goals by 2050, by 2040 we should manufacture only fossil-free vehicles”

water consumption to reduce our carbon footprint in all our business units.”

Scania, a leading provider of commercial ve h i cl e te c h n o l o g i e s , i s a l s o m a k i n g

Gilberto Ramírez

sustainable transportation a priority. “At

Director of Strategic Planning & Business Development at Volvo Trucks & Mack Truck

Scania we are aware that global warming remains an issue and ac t proac tively in finding a solution. We have different te c h n o l o g i e s av a i l a b l e f o r d i ff e r e n t markets that include vehicles powered by

Mexican authorities are changing regulations

hydrogen, ethanol, biogas, LP gas, natural

to address greenhouse gas emissions and

gas and electricity, among others. We are

provide cleaner transportation. NOM-044-

aware we are living a transition period,

SEMARNAT, for example, regulates vehicle

in which technologies will last longer.

efficiency and greener fuel consumption

Scania adapts to customers’ need,” said

using technologies such as EPA 10 and

Raúl Rodríguez , Business Transformation

EURO VI. However, the poor availability

Solutions Director at Scania México. Scania

of u ltra - l ow-su lf u r d i e se l m a ke s th e

plans that by 2050 all its units will be

implementation of the NOM a challenge.

powered by alternative sources. By 2025,

“NOM-044 regulates diesel emissions and

50 percent of its production processes

the manufacturing of this technology. Heavy

will use renewable energy and as part of

vehicle manufacturers must comply with this

the UN Global Pact Scania will continue to

regulation but to do so we need to have ultra-

work to promote sustainability.

low-sulfur diesel available to use EPA 10 and EURO VI technologies. We are working with

For Mack Trucks and Volvo Buses, two of

SEMARNAT to acquire more information to

the top 10 brands in the Mexican commercial

apply this regulation and create new ones.

vehicle market, sustainable transportation

This norm will reduce emissions in new

is also essential. Volvo plans to comply with

vehicles but it cannot reduce emissions in the

the goals set in the Paris Agreement by

old vehicles that are already on the streets,”

2050. “This is the greatest challenge of our

said Miguel Elizalde, President of ANPACT,

generation but sustainable transportation

the national association of heavy vehicle

solutions are essential for a society to thrive,”

manufacturers.

says Gilberto Ramírez, Director of Strategic Planning & Business Development at Volvo

Heavy vehicle manufacturers have clear

Group Mexico. “With many of our products

strategies to comply with increasingly

being used for 10 years on average, if we

stringent environmental regulations and

want to reach our goals by 2050, by 2040 we

reduce their carbon footprint. “The need

should manufacture only fossil-free vehicles,”

for sustainable mobility solutions will

says Ramírez. By 2030, 30 percent of Volvo

remain as long as there are cities. Daimler

Group’s production will be fossil-free vehicles.

15

C on f e r ence H ighlights Sustainabilit y is not only achieve d

In transition to more extensive green vehicle

by a vehicle portfolio; it also requires

technologies, fuel efficiency for both buses

proficient aftersales services, training and

and trucks is key. “Efficiency is essential.

technology. “Sustainability in aftersales

We are transitioning to more sustainable

has also been important for us. We offer

vehicles but current models should be more

remanufactured components that maximize

efficient too,” said Ramírez. Efficiency will

the units’ per formance in operations .

lead to greener technologies. “Reducing

The remanufac tured components are

fuel consumption is highly beneficial for

considered ecological in terms of recovery

transportation. Acquiring technologies for

and component assembly,” said Gómez.

fuel efficiency will generate greater profits.

Scania is focusing on training vehicle

Infrastructure is also essential for vehicle

operators to reach greater efficiency.

operations. Ultra-low sulfur diesel will

“Training drivers can improve fuel efficiency

promote greener technologies,” said Gómez.

by 5 percent. We are launching flexible maintenance programs and changing our

To reach a sustainable transportation,

approach based on our clients’ operations.

multistakeholder partnerships are essential,

Finally, we are digitalizing our fleet by

said Scania’s Rodriguez: “We need to work

connecting our vehicles, which allows us

from four perspectives: industry chambers,

to detect the ideal time for maintenance,”

governments, OEMs and clients. This should

said Rodríguez.

be an ongoing work,” he said

TELEMATICS ARE CRUCIAL FOR SMART FLEET MANAGEMENT Telematics is no longer a luxury in fleet

“Telematics is about connected cars, which

m a n ag e m e nt b ut a key reso urce fo r

will collect data to monitor everything related

companies to smartly manage their assets

to the vehicle from its location to the drivers’

with positive cost-benefit solutions to

behavior. They even give the possibility to

maximize profits and reduce risks effectively.

monitor the condition of the vehicle. We can

While implementing telematics in Mexico

collect all this data and offer it so customers

would be a win-win proposition for all players

can take safe, well-informed decisions,”

involved, there are diverse challenges in the

said Kent Bjertrup, CEO-Mexico of ALD

way, agreed industry experts.

Automotive.

16

C on f e r ence H ighlights Telematics systems are installed in vehicles

attending the demands of 111 sectors of the

and send data to track the location and

Mexican economy and mobilizing over 550

performance of the vehicle and the behavior

million tons of merchandise, according to

of the driver. Information can be sent digitally

the National Chamber of Cargo Transport

to the company’s servers or through mobile

(CANACAR).

applications. These systems are more complex than a GPS, which only provides

“Telematics is already a reality in most of

a limited set of data such as the real-time

trucks in Mexico. But in countries such as

position of vehicles.

the US it is no longer an alternative, but an obligation. In cargo transportation, telematics

“Telematics is a reality. The technology is

help prevent accidents. It detects system

already here; it is just about implementing it

failures, routes, traffic and drivers’ behavior

correctly. It is profitable to use it; the real cost

in real time. Telematics became crucial to

would be not to do it. If you are going to use

offer a better service to customers while

telematics, you need to have a complete

reducing costs and becoming more efficient.

implementation program rather than only

It should not be seen as an expense, but as

buying the systems. A GPS is no longer

an investment,” said Mauricio Medina, CEO of

enough to know everything about your fleet,”

TIP México.

said Fernando Ardura, Chief Business Officer of Traffilog.

Telematics do not only help when vehicles are

“Telematics is a reality. The technology is

on the road but also while the fleet is parked in

already here; it is just about

the company or in shipping terminals, where

implementing it correctly. It is

vehicles could also suffer damages, said

profitable to use it; the real cost would

Rafael Lajud, General Director of Invarat. The

be not to do it. If you are going to use

integration of the whole services offered by

telematics, you need to have a

telematics is key for the companies to make

complete implementation program

better decisions, added Lajud.

rather than only buying the systems. A GPS is no longer enough to know

Digitalization is drastically changing the

everything about your fleet”

logistic s industr y. Fleet management

Fernando Ardura Chief Business Officer of Traffilog

software helps companies managing large databases of information, with records such as vehicles purchased or leased, maintenance schedules, service histories, operating expenses and financial data.

Companies need to know that their light or

These systems re duce administrative

heavy vehicle fleets are safe and profitable,

processes and can set alerts and

according to Ardura. Telematics provides

send emails.

this knowledge. With the precise data it collects, fleet management companies

The opportunities that technology offers

can maximize fuel usage, one of their most

come with challenges for companies and

important expenses. Knowing the behavior

telematics is not the exception. “Mexico

of drivers allows companies to improve their

presents a lot of challenges, with a very

habits and become more efficient. “A correct

complex road network, security issues

use of advanced telematics allows you to do

and many suppliers. The key to achieve

preventive maintenance rather than corrective

perfect shipping is standardization, to

maintenance to vehicles. Smart maintenance

lower costs and achieve consolidation,

often means a longer useful life of the units,”

with a clear legal framework to get a real

said Ardura.

win-win deal for every player involved.

Standardization will boost investment,”

The auto transport business contributed

said Marco Lizarde, Business Unit DHL

with 3.4 percent of Mexico’s GDP in 2019,

Consultant. The four main pillars for a

17

C on f e r ence H ighlights correct integration are data analytics, data

and make it look beautiful but it is all

master, software and good transportations

about implementation, investing time and

practices, said Lizarde. “It is all about

changing the behavior of drivers,” said

investment. You need to know where data

Bjiertrup.

is going to be stored. Software systems are key and they have to intercommunicate

Telematics is becoming massive across the

with other systems. We need to integrate

world in the insurance sector. Insurance

our systems.”

policies costs need a correct balance; “if they are too expensive, clients will go

Several business owners, carriers and fleet

to another company and if they are too

management leaders often have a short-

cheap, accident rates will skyrocket and

term vision regarding telematics and the

it will no longer be a profitable business,”

implementation of complex technology

said Ardura. This technology applied to

systems. “We have to be more constructive

the insurance business analyses the habits

when explaining the benefits of these

of the client, combining a broad range of

systems. We should not offer our products as

information from the user’s age to their

small, separated services but as a complete

driving habits, allowing both the company

and integral solution for fleet management

and client to reach fair rates.

companies that will help them reduce costs and maximize profits,” said Lajud.

While investing in telematics systems could be costly for companies, not doing

A correct use of telematics also needs

it could be worse. “You have to measure

to set clear goals and meet them. “Data

to improve,” said Medina. Once achieving

is ex tre m ely complic ate d , on e n e e ds

s t a n d a r d iz a t i o n o f t h e s y s te m s a n d

to understand it, organize it and then

enough investments, the entire industry

work with it, linking it to the objectives

could be benefited from the information

already defined. We can program data

that telematics provides.

TECHNOLOGY INFRASTRUCTURE: ESSENTIAL FOR VEHICLE SALES A s consum e r prefe re nces evolve d in

care that the human factor has brought to

response to the pandemic, the automotive

the carmaker. “AI has delivered a lot to the

industry had to adapt its processes to the

industry and it is impressive but companies

new way of doing business. In this new

have to find a balance between the digital

dynamic, technology has stepped in to

and the physical experience.”

assist and improve the sales process for OEMs. However, the challenges for the entire

One of the issues challenging the industry

ecosystem to fully embrace the digital sphere

is budget. To overcome this challenge, said

are still abundant.

Jorge Vallejo, President and CEO at Mitsubishi Motors de Mexico, many misconceptions

Technology has positioned itself as a partner

have to be overcome, ranging from dealers

of the automotive industry, helping brands

to the sales force. “While there are teams that

reach their consumers in a different and

are exceeding their goals by using all these

sometimes more immediate way, said Miguel

tools in their processes, there are others

Barbeyto, President of Mazda Mexico. “In the

that are not going to be able to change

automotive industry for some time now we

their mindset and use these tools to their

have seen the evolution of technology in leaps

favor,” he explained, “It all starts with seeing

and bounds. However, the transformation

technology as an ally and not as a risk.”

that consumer preferences are going through has set great challenges for the entire

Data provided by tools such as IA cannot

ecosystem.” At Mazda, Barbeyto added, it

remain only in the hands of a few, but

has been key not to neglect the detail and

must be shared with distributors and

18

C on f e r ence H ighlights producers in order to “unify efforts,” said

attractive while simultaneously improving

Vallejo. According to Google’s Community

the customer experience.”

Mobility Report, search volume for the best deals on cars and trucks grew 70

The customer experience, however, does

percent globally in March 2020 compared

not end when the check is signed and

to the same period last year. “This means

that is where digital tools play a key role

that people are increasingly turning to

in customer retention and satisfaction, said

any digital tool to compare car models

Regina Granados, CEO of LeasePlan Mexico,

and prices.”

a leasing company operating in more than 30 countries and with more than 13 years of

The luxury automotive sector also had to

experience in Mexico. “Selling is much easier

take the leap into the digital world, driven

if your customers are satisfied and if it is a

by the fact that in recent months the

word-of-mouth recommendation.”

concept of luxury has been redefined in the minds of consumers, said Raúl Peñafiel,

Customer onboarding through technology

Managing Director of Jaguar Land Rover.

has become a central part of automotive

“ We now have customer profiles that

companies’ strategy in recent months.

buy a Land Rover but do not show their

But entering as a technology provider is

preferences in the way they dress,” he

not easy in this industry, said Joaquín

said. “Customers have a broader definition

Rivera, CEO and Co-Founder of Kikoya,

of what is a luxury to them.” Faced with

a technology provider that specializes in

this scenario, Jaguar Land Rover has relied

credit origination processes. “We perceive

on technology to balance the “dichotomy

a need to own and control end-to-end

between being increasingly efficient and

processes,” said Rivera.

THE NEW AUTO SECTOR NEEDS TECHNOLOGY Technology and digitalization had steadily

Estrada, General Director of Volkswagen

been changing the automotive industry for

Brand Mexico.

the past few years. However, the pandemic accelerated these processes , pushing

“We had been working with innovative

the sector to its biggest transformation

projects in Mexico years before COVID-19,

i n t h e c e n t u r y, a c c o r d i n g t o E d g a r

but when the pandemic hit everything

19

C on f e r ence H ighlights was pushed for ward . For instance, in

to the World Bank. Mexico holds great

2019 we started working with a mobile

potential for the automotive industr y

application so our customers could watch

thanks to its young, 28-year-old average

their car service on real time and receive

population, and the possibilities to access

online quotations and budgets. The goal

to bigger percentages of the population.

was to deliver the app by 2024 but the

The big opportunities will come once the

pandemic changed everything and the

inequality that prevails in the countr y

pilot version was launched two weeks

i s a d d re s s e d . O n l y 5 p e rce n t of th e

ago,” said Estrada.

129-million population is able buy a new car, according to Estrada, but there are

Volkswagen takes innovation seriously and

between 1 million and 1. 5 million units

recently announced the implementation of

available for sale in the Mexican market.

AI and robotics in its North America plants, including the two located in Mexico. This

During 2020, the Mexican industry went

will increase their productivit y by 30

through its worst period in modern history.

percent. The German automaker will also

In April, less than 35,000 light vehicles

invest US$1 billion during the coming years

were sold. One year later, sales bounced

in its three plants: Silao in Guanajuato,

back to over 83,500 units, a 139 percent

Chattanooga in Tennessee and Puebla.

increase, according to INEGI.

Vo l k s w a g e n ’s g o a l i s t o i m p l e m e n t te c h n o l o g y s u c h a s c l o u d s o f t wa r e ,

In addition to the impact COVID-19 caused

intelligent robots and AI, which require

in sales and exports, the pandemic boosted

exhaustive training and c apacitation .

shortages in supplies, mainly semiconductor

With the unified sof tware launch , the

chips, which have become essential as

a u to m a ke r w i l l b e a b l e to o p t i m i ze

automakers move toward electric vehicles

collaboration between its plants, upgrade

(EVs). The semiconductor shortage disrupted

the work environment for its employees

supply chain across the world and by the end

and suppliers and improve the overall

of 2021, they impacted the production of over

manufacturing process.

10.5 million units globally and 2 million units in North America, according to IHS Markit.

D espite the pandemic , M exico is still co n s i d e re d a n a t tr a c ti ve m a r ke t f o r

“Semiconductors shortages have forced us

foreign investment. The Mexican economy

to adjust our sales levels across the world,

is in the Top 20 worldwide, according

including Mexico. These are challenging

20

C on f e r ence H ighlights times, no one knows when the supply

Interconnectivity and dynamism are key to

chain will return to normal. It has become

the light vehicle market, especially as SUVs

a bottleneck. However, we took advantage

take the spotlight in North America.

of those times when production stopped to strengthen our processes,” said Estrada.

Technology continues to drive drastic ch a n g e s in th e a uto m otive in d u s tr y.

Electrification is arriving ever ywhere,

Volkswagen is embracing digitalization and

according to Estrada, who explained that

opened the first City Store of North America

Volkswagen has already an important

in Mexico City and one of its first five in the

presence with EVs in countries where

world, according to Estrada. “This is the new

infrastructure is ready for this technology,

way to interact with customers. During the

such as the EU, the US and Canada. Mobility

past 100 years, clients visited traditional

is eventually going to become electric in

dealers. City Store is a completely different

Mexico, but combustion engines and HEVs

concept, with a new customer journey

will continue to dominate the Mexican

where clients will see the vehicles through

market, according to industry experts.

augmented reality, interact and receive online quotations and assistance.”

“ Volkswagen has the ID family of EVs across the world. Our future vision includes

While the industry continues moving toward

bringing them to Mexico, which is why we

electrification, technology also continues

continuously work with other brands and

changing the way production, sales and

the public and private sectors to generate

exports work. It will also continue improving

synergies and make electrification a reality

the entire customer experience, from driving

for Mexico in the near future,” said Estrada.

to car service and second-hand market.

UNDERSTANDING LOCAL SCENARIOS: KEY TO RAMP UP OPERATIONS With numerous trade agreements , an

should work with local stakeholders to seize

i d e a l l o c a t i o n a n d a yo u n g , h i g h l y -

regional benefits, said industry experts.

qualified workforce, Mexico is an attractive destination for the automotive industry.

“Mexico is the place to be if you work in

B u t p ro d u c i n g i n th e co u ntr y i s n ot

the automotive business,” said Florian

necessarily easy and companies aiming to

Hanft, CEO México of SONAVOX, a Chinese

land manufacturing operations in Mexico

Tier 1 supplier that landed manufacturing

21

C on f e r ence H ighlights operations in the country less than five

Frost & Sullivan. “It is important to have

years ago. Sonavox’s venture in Tlaxcala,

local suppliers really close. In Mexico there

o n e of M exico’s sm a ll e s t s t ate s , wa s

are large Tier 1 suppliers facing challenges

considered ‘successful ’ thanks to the

at their own supply chains, particularly

company’s close collaboration with the

because of the lack of certain components.

state government and the local automotive

It is important to work together with local

cluster. “When Sonovox chose to come to

stakeholders to develop a sustainable

Mexico we explored different locations

ecosystem. Companies should also think

and decided that Tlaxcala was where we

about sustainability,”

wanted to be. Tlaxcala is the smallest state o f M e x i c o a n d w e h ave b e e n r e a l l y

While companies such as Sonavox have

successful based on three pillars. First, the

come landed operations in Mexico on

government made an incredible effort and

their own, others recommend the use of a

we have kept in close contact with them.

Shelter service provider. The reason is that

Second, the state has made investments

shelters “provide certainty” in bringing

in dual education programs that support

operations into the country. “You need to

th e in d u s tr y. Fin a lly, th e a uto m otive

have the knowhow to operate in Mexico

cluster helped us to address to the cultural

and companies need a partner to support

differences we faced as a Chines company.

them in this regard,” said Paulina Gónzalez,

Thanks to these three pillars, we managed

Regional Director of American Industries.

to successfully ramp up operations,” said

International companies also need to

Hanft. After successfully ramping up its

identify the ideal site to land their operations

manufacturing operations of sound

by closely analyzing the strengths and

components for Ford, Volkswagen Mexico,

weaknesses of each region, which will allow

Volkswagen N or th Americ a and Audi

them to estimate how much they’ll truly

p r o j e c t s , S o n a vo x i d e n t i fi e d t h a t a

need to invest to get their operations up

com pre h e nsive un de rsta n ding of th e

to speed. “Companies need to create cost

region was key. “We need to have someone

of business model to determine how much

that knows the country. You cannot arrive

are they going to spend in the country. This

assuming everything will work as in your

model should take into account all the fine

home country,” said Hanft.

print. Companies need to take into account the final destination of their products,

“We have seen that Mexico has shifted from a Maquila country, which it was when NAFTA entered into force. Now, Mexico is a country that adds value. Local plants are not only recognized in their municipality or state; Mexican plants are acknowledged by global headquarters thanks to their productivity levels”

Lorena Isla

LATAM Director of Frost & Sullivan

whether they should produce only for the local market, for exports to the US or other countries or both,” said González.

One of Mexico’s key strengths is its labor force, which allows companies to increase the added value they offer. “We have seen that Mexico has shifted from a Maquila country, which it was when NAFTA entered into force. Now, Mexico is a country that adds value. Local plants are not only recognized in their municipality or state; Mexican plants are acknowledged by global headquarters thanks to their productivity

Companies that want to stablish in Mexico

levels,” said Lorena Isla, LATAM Director at

must understand the local ecosystem

Frost & Sullivan.

of each region in the countr y and the manufacturing ecosystem those regions

“ Mexico has become a leader in auto

support, explained Lorena Isla, Mobility

parts manufacturing. We have seen added

Director Latin America at consulting firm

value through worker’s productivity and

22

C on f e r ence H ighlights commitment, not only due to labor costs,”

their Mexican teams work. It is not the same

said Gonzalez. Having Mexican teams has

as was 20 years ago. Now, there is a large

been essential for a successful landing,

number of professionals and we need to

explained Hanft. “Companies need to let

embrace this country’s culture,” he said.

REINFORCING NORTH AMERICA’S SUPPLY CHAIN Supply chains in all industries have taken

regions. “It has been hurt but we have been

a hit from disruptive events that have

one of the countries that have been hit the

gone beyond the pandemic. High demand

least,” he said. “That is a good sign and a

for semiconductors and tight supply, the

positive indication that we have lost our fear

blockade in the Suez Canal that is still

of the new USMCA and that it will bring a lot

wreaking havoc and the new USMCA have

of opportunities.” Today, he added, Mexico

posed enormous challenges for numerous

stands as a global production hub for the

industries, especially automotive. Mexico,

aerospace and automotive sector, not only

however, holds a privileged position to put

driven by its proximity to the US market,

itself ahead of other regions in the world.

but also by its potential as an exporter to other regions.

In recent years, national, regional and multinational companies have flocked to

Gradually, Mexico has moved from being

the country as an attractive destination to

solely a manufacturing country to become

relocate their supply chains, said Mónica

an attractive spot for R&D projects for

Doger, Director of the Clúster Automotriz

national and international companies,

from Puebla and Tlaxcala. Attracted by both

said Ruben Lostal, Location Manager of

geographic and labour benefits, businesses

MUBEA. For this to fuel further growth, he

from all industries have set their sights on

added, encouraging more people to study

Mexico, “not only for manufacturing but also

engineering is key. “Right now Mexico is

for applied technology projects,” said Doger.

producing more engineers than the US per

Yet the challenges Mexico faces in attracting

100,000 inhabitants,” he shared. “We need

further investment are numerous, she added.

to seize on that but we need to improve secondary education.”

According to Martin Toscano, President of Evonik, foreign direct investment in Mexico

The ongoing changes the country has

has not been impacted as much as in other

experienced in its industries, coupled with

23

C on f e r ence H ighlights events including the pandemic and its

predictive one where technology is key,”

disruption of supply chains, have prompted

explained Victor Galvan, Senior Manager

Asian companies to migrate to the region to

of KPMG Mexico. Data mining, vir tual

centralize their value chains, said Cristobal

reality, data analytics, AI and Industry

Magallanes, Automotive Sales Director of

4.0 principles are just a few of the tools

SKF. “Suppliers to customers have been

the company is leveraging to accelerate

coming to Mexico,” he said. “This will allow

enterprise growth.

for more competition and therefore level the playing field for everyone.”

M ex i c o a l s o s t a n d s o u t g l o b a l l y f o r being “open for business,” Toscano said,

Multinational professional services group

because the regulatory environment is

KPMG, which in recent years has assisted

much less protectionist than at other large

the countr y ’s manufacturing industr y,

economies such as Brazil. To capitalize on

has developed transformation strategies

Mexico’s unique strengths vis-à-vis other

to help businesses seeking to establish

regions of the world, all players in the

operations in Mexico. “We help them take

ecosystem have to pull their weight. “We

their projects from an operational and

no longer play alone,” Toscano stressed.

reactive stage to a more intelligent and

“Today we are all connected in some way.”

MATERIAL TECHNOLOGY MUST KEEP UP WITH INDUSTRY NEEDS Across the world, mobility is adopting

and both governments and OEMs have

cl e a n e r e n e rgy so u rce s . B ut , hyb rid ,

set up different short-term goals for their

electric and smarter vehicles could not

companies globally. Making this possible

exist without the technological materials

requires that the entire value chain works

that make them possible. The entire supply

a s a te a m b e c a use a uto m a ke r s n e e d

chain must understand the specific needs

the correct materials to develop smart

a n d m e g a t re n d s o f t h e a u to m o ti ve

vehicles. “Communicate, collaborate and

industry, agreed industry experts.

create,” said Zaragoza. “We all have to work with a collaborative mindset. I need

“We all have to work with a collaborative mindset. I need to understand what my client needs are and adapt to them.”

Juan José Zaragoza

President LATAM of DuPont

to understand what my client needs are and adapt to them.”

Energy sources, sustainable materials and electrification receive the most attention when talking about a more sustainable a u t o m o t i v e s e c t o r. H o w e v e r, o t h e r practices such as lightweighting play key

“Players have to adapt to the mobility

roles in driving the market toward cleaner,

of the future. The mega trends are clear

greater energy efficiency. Lightweighting

in the industry: lightweighting, vehicle

swaps traditional materials for lighter

downsizing, comfor t, security and

ones, reducing the amount of material

sustainability. Sensors will play a key

used. An average light vehicle weights

role. A washing machine usually has 11

1.5 tons to 1.7 tons and half a ton of that

sensors but autonomous cars will need

belongs to a polymer that reduces the car

over 3,000. The entire sector is working

weight substantially, while generating a

to meet those changing needs,” said Juan

greater resistance and security, according

José Zaragoza, Latin America & Mexico

to Zaragoza.

President of DuPont.

Technology, digitalization, sustainability D eve l o p e d e c o n o m i e s h ave a l r e a d y

goals and the pandemic have all come

adapted to the electrification tendencies,

together to create majorly change the

24

C on f e r ence H ighlights

automotive industry, according to Luis

“We work to improve cars’ visibility. For

Gonzáles, General Director at Automotive

instance, in the case of Lidar sensors, a

Cluster of San Luis Potosí. Every single

black vehicle reflects only 6 percent of the

material in the vehicle, both on its interior

close infrared signal that a white car would

and exterior, will play a key role in making

reflect, making a black car significantly

the industry sustainable.

less visible and less safe than a white car.

We produce anti-reflect coatings and

Traditionally, paintings and coatings only

intelligent coatings that enable darker

provided cars with basic protection and

colors to have the same reflectance than

decoration. Today, the industry demands

clearer ones,” said Macouzet.

much more innovation in their paints. “As the auto industry transforms, we have

Innovation and smarter vehicles would

been innovating. Autonomous cars will

not be possible without better, smarter

need more coating. Design will change

tires. “Tires are the only part of the vehicle

and interiors will need more intelligent and

that touch the ground,” said Pierre-Louis

durable surfaces. Our paint has to adapt

Dubourdeau, President & CEO of Michelin

to the entire technology ecosystem,” said

Central America. The industry is also building

Adriana Macouzet, Vice President Latin

state-of-the-art tech solutions for the tire

America and General Manager of PPG.

industry, including connected, rechargeable and airless tires. Smarter tires will also help

The automotive paint sector has also

collect data, which is useful for telematics.

adapted technology common to the aviation industry, which enabled cars to connect

“Airless tires will bring peace and security

effectively and communicate with each

for drivers and the possibility to improve

other and the environment (roads or stop

fleet productivities. The new tires we are

signs) in the best possible way, according to

developing will not need maintenance and

Macouzet. Technology such as Lidar sensors

our ecological footprint will be reduced

has been implemented massively in Mexico.

dramatically. Twenty percent of the tires

These sensors use eye-safe laser beams to

thrown away are destroyed while having

create a 3D representation of the surveyed

useful life. That percentage represents 2

environment. A lidar sensor emits pulsed

million tons a year that we could avoid with

light waves to the surrounding environment,

our new tires,” said Dubourdeau.

which bounce back to the sensor. The device uses the time it took for each pulse to return

Textiles are also part of the automotive supply

to calculate the distance it traveled.

chain. “Fabrics have to be visually attractive

25

C on f e r ence H ighlights but easy to clean, with a long useful life.

have been reduced considerably in the last

Technology brought software that allows us

years, raising players’ uncertainty.

to keep a precise stock and serve our clients better. We have designed safer uniforms for

The main challenge will be to make EVs’

the automotive industry employees,” said

p ro d u c tio n truly sc ala ble to m assive

Elvia Bedolla, Plant Manager at LAVARTEX.

produc tion , said Macouzet. To do so, good communication between all

Keeping up with industry needs is difficult

players involved is necessary, especially

for ever y player involved in the value

considering the large initiatives and goals

chain, according to Zaragoza. The industry

that OEMs have set for the future. Working

is changing rapidly and adaptation is key

o n t h e E Vs ’ e n e r g y i n d e p e n d e n c e ,

to address the difficulties. “Innovation has

lowering costs and boosting infrastructure

its risks and challenges. Producing new

a re th e m a i n keys fo r th e m a r ket to

materials is specially complicated and

continue moving forward. “Our role is

demands high investments with correct

to become true allies of automakers for

risk analyses to make them financially

this to become a real, massive innovative

viable,” said Zaragoza. Innovation times

production,” said Macouzet.

VEHICLE CONNECTIVITY INCREASINGLY CLOSER THANKS TO 5G O ve r t h e p a s t f e w ye a r s , c a r s h ave

transformation as it allows automakers

undergone a transformation towards the

to deliver new services including up to

digital as manufacturers have fitted screens

8k resolution. “5G is going to transform

and sensors into vehicles. However, the

the way we distribute video like 4G did

industry has been waiting years to offer

with audio,” explained Anaya. “It is already

a truly interconnected service ecosystem.

natural for everyone to listen to music on

The tool it needs to do so is almost here:

streaming platforms and that is made

5G technology.

possible by a network that supports the bandwidth necessary to do so.” 5G will do

“The automotive industry has been waiting

the same thing except that it will focus on

for a network like 5G to be able to offer

video, he added.

new services like autonomy and cloud access ,” said Ricardo Anaya , Product

With the speed capabilities that 5G will

Manager at Qualcomm. The emergence

bring (over 100 Megabits per second, Mbps),

of 5G networks is essential for digital

“working in the cloud will be as working in

26

C on f e r ence H ighlights the internal memory of a computer.” Network

operators investing to deploy 5G technology

latency, which refers to the time it takes for

globally. “These numbers indicate that half

data to travel from one place to another,

the world has officially set its sights on 5G.”

is essential for the automotive industry as it will enable “remote decision making”

According to Qualcomm, 5G will enable

in autonomous processes. 5G offers an

US$13.1 trillion in global sales activity by

extremely low latency rate, said Anaya. “This

2035. “All industries are going to capitalize

migration will enable millions of devices to

on this technology,” Anaya explained,

be connected.”

“The automotive industry, in particular, has been waiting for it for years.” The

As the network grows, powerful processing

transformation that this net work will

close to where the connections are will

bring to the sector includes manufacturing

enable new forms of collaborative work.

p ro ce s se s with co ll a b o rative ro b ot s ,

“You can make simpler devices with more

sales and maintenance processes ,

battery life,” said Anaya. “This happens when

service automation, in-car experiences

you have good processing between the end

and interconnec ted transpor tation

device and the edge AI.”

services such as traffic signals, bridges and infrastructure. “The priority is for a

5G must be based on global standards and

person to get in their car and arrive at

be interoperable and easy to replicate. “The

their destination as safely and efficiently

5G that is being applied in Germany is similar

as possible.”

to what we expect to be implemented here in Mexico,” said Anaya. According to GSA data,

Today more than 120 million cars are

as of the end of July 2021, there were over 175

powered by Qualcomm technology around

operators with 5G commercially deployed in

the world . “ The car is one of our top

over 70 countries and over 285 additional

priorities right now,” said Anaya.

AI, MACHINE LEARNING OFFER MANUFACTURING REAL SOLUTIONS Artificial intelligence (AI) and Machine

is advancing toward AI and ML but we

Learning (ML) are opening new possibilities

need to change the mindset of companies.

to the world’s industries, including the

Sometimes people think that this technology

automotive sector. Once these technologies

is highly expensive or complex but there are

reach their full capacity and create an

numerous tools available for Tier 2s,” said

integrated ecosystem, all the automotive

Sergio Bautista, Robotics Local Business Unit

supply chain could reap substantial benefits..

Manager of ABB.

“The automotive sector is advancing toward

The pandemic, technology and changes

AI and ML but we need to change the

in consumer behavior are disrupting the

mindset of companies. Sometimes people

operation and processes of companies.

think that this technology is highly expensive

Automakers, suppliers, dealers and everyone

or complex but there are numerous tools

involved in the supply chain need to adapt

available for Tier 2s”

to changes, taking advantage of the new

Sergio Bautista

Robotics Local Business Unit Manager of ABB

technologies powered by data.

Despite not necessarily being electric, newgeneration vehicles are getting smarter thanks to software and telematics systems

“The technology is already here. Mexico’s

that generate data and connect with other

problem is that while it some sectors are

vehicles. “Analytics and big data are starting

boosting Industry 4.0, Industry 1.0 is still

to focus on specific industries in Mexico. We

rampant in others. The automotive sector

have hyperconnectivity, with huge amounts

27

C on f e r ence H ighlights of data being generated. The right connection

US$1 billion during the coming years in its

and use of this information helps lifecycle

three plants in North America to successfully

management, processes design, supply chain

implement technology such as cloud

management and manufacturing processes,”

software, intelligent robots and AI, which

said Javier Vallejo, Senior Manager of

require exhaustive training and capacitation.

Architect Solutions of AWS.

With the unified software launch, Volkswagen will be able to optimize collaboration between

AI is not only used for autonomous vehicles,

its plants, upgrade the work environment for

it is also useful for forecasting, according

its employees and suppliers and improve the

to José Rivero, Country Manager of Infor.

manufacturing process in general.

“The pandemic taught us the importance of assertive forecasts,” which based on ML

Adaptability is key. It is not only about

motors and analytics models could predict

OEMs or Tier 1s, companies need to know

future demand with precision. Manufacturing

how data influences the entire supply chain.

plants continue adding sensors and “collecting

“Volkswagen is connecting its 120 plants with

tremendous amounts of data,” said Rivero.

over 500 suppliers in on single data protection

These sensors enable companies to know

strategy to speed up the complete process

how machines are working in real-time and

from the beginning to the final consumer,”

forecast the ideal moments to do preventive

said Vallejo.

maintenance, saving time and money.

The main challenges that AI and ML face both Telematics offer similar benefits when

in Mexico and the world are the standardization

used in vehicles in movement. Sensors in

and homologation of information, agreed

vehicles provide information about the car’s

industry experts. “People talk about a fully

health, ideal maintenance times and drivers’

integrated ecosystem, but this is idealized;

behavior. AI came to change every part of

it still does not exist,” said Bautista. Mexico

the automotive industry, from manufacturing

does not lack people talented in data science.

to sales, fleet management, insurance

Electrification and new tendencies in the

companies and autonomous vehicles.

automotive sector will change the industry.

AI and ML will have to keep up with the new

AI solutions are being offered “to clients

needs and different processes that OEMs are

looking to give their customers a plus, aiming

implementing, said Bautista.

to reach the highest standards of quality,” said Abraham Sosa, Director of Global Accounts in

Technologies such as AI and ML are yet to see

Latin America at Universal Robots. Collecting

their best, full potential, according to Sosa,

data is key to take well-informed decisions.

but to reach it companies need to trust the

However, collecting information is not enough.

technology solutions offered. “We have to traduce the solution created with data into

“Data is vital in the manufacturing process.

something applicable to real life and have a

You cannot improve something that you did

technology-flexible client to test the solutions

not measure to know its exact condition.

offered,” said Sosa.

Integration to an ecosystem is needed for a future intelligent plant that is able to

The biggest challenge is not developing

automatically control processes, stockage,

new technology but to smartly use the one

budgets and forecasts,” said Ricardo Anaya,

already available, according to Vallejo. Tech

Product Manager at Qualcomm.

managers and company decision makers need to clearly identify which pieces of

Volkswagen, one of the most important

information are the ones needed to make

employers in Mexico with over 15,000

the decisions and “avoid the temptation of

employees in its two plants, has already

activating hundreds of alerts that will not

started a digital revolution in its plants across

really help. It is important to focus on key

the world. The German automaker will invest

pieces of data,” said Vallejo.

28

C on f e r ence H ighlights Data translation into real solutions is

creation of a connected ecosystem will

only possible with hard, prolonged work,

play key roles in the following years for the

a g re e d exp e r t s . I nte g rati o n a n d th e

automotive industry.

MEXICO IS READY FOR MORE R&D Mexico is home to 14 light vehicle OEMs, 10

software development. Mexico is having a

heavy vehicle OEMs and hundreds of Tier 1

more prominent role by capitalizing on its

and Tier 2 suppliers. While it is a promising

competitive advantages to accelerate its

land for manufacturing operations,

role in the automotive sector,” said Watty.

companies are now recognizing its potential for R&D and engineering operations, and

Th e co untr y is shif ting f rom ma q uila

investing accordingly..

production–manufacturing

low-

technology par ts at a smaller cost–to

“In the early 2000s Faurecia’s three facilities in Puebla were fully focused in manufacturing. But, the company was aware of where the industry was going so it started to invest in engineering operations. In 2007, we launched our first R&D center in Santa Fe”

Karla Góngora

R&D Director México of Faurecia

“mindfac turing ,” a play on the words “mind ” and “manufacturing” meant to reflect the education , knowledge and technical capabilities of the local labor force. Now, the priority is for universities and training centers to provide the talent the sector needs. “We need to generate that knowledge. It is necessary that new students and graduates have a mindset for innovation,” says Alejandro Rojo, Director of Au to m oti ve C e n te r fo r Ad va n ce d Mobility at Tecnológico de Monterrey, one

“ In th e ea rly 20 0 0 s Fa ure cia’s th re e

of Mexico’s leading private universities.

facilities in Puebla were fully focused in manufacturing. But, the company was

M exico’s min df a c turing tre n d is o nly

aware of where the industry was going so it

a refl ec tion of th e countr y ’s “natural

started to invest in engineering operations.

evolution,” said René Montaño, Director

In 2007, we launched our first R&D center in

of CIDETEQ, a chemical research center

Santa Fe,” says Karla Góngora, R&D Director

in Queretaro. “There has been an

México of Faurecia. Years later, the company

evolution from manufacturing to design

realized it was ready for new R&D centers

and engineering. It is an opportunity to

and launched one for seating and interiors.

innovate and acquire experience. It is also a natural evolution as Mexico improves its

Other companies have also seen Mexico’s

capabilities to train human resources.”

potential for engineering and research.

Bosch inaugurated and R&D center in

The accelerate rate at which the automotive

Guadalajara, also known as “Latin America’s

sector demands product innovation is

Silicon Valle” for its technology parks and

driving both companies and research

companies, in 2014. Bosch now has about

centers to innovate. “It is all about where

450 employees in that center but aims

are we going and what we are expecting

to double its capacity within the next

from mobility in the future,” said Watty.

five years, said Eduardo Watty, Mobility

There are four major mobility trends, he

Director Mexico at Bosch. The company

adds. The first is personalized mobility,

also has an engineering center in San Luis

which implies the incorporation of new

Potosi that focuses on powertrain solutions

services and solutions that allow for digital

and electrification. “Mexico is becoming

interaction. Second is autonomous mobility,

a countr y not only for manufacturing

which requires different architectures for AI

o p e ratio ns b ut also fo r p ro d u c t a n d

applications that foster its advancement.

29

C on f e r ence H ighlights At Bosch autonomous mobility “is part of

a s th ey a re o u r t wo s trate g ic p ill a r s

our vision to have zero accidents. We are

fo r 2 03 0. Fo r ove r 1 5 ye a r s we h ave

incorporating sensors and lidars to ensure

suppor ted companies design elec tric

a safer environment.” The third is connected

power trains and we have created a solid

mobility, which Watty forecasts will gain

national network that supports different

more importance in the coming years as

companies in different regions. We are

vehicles use a wider variety of services.

now assessing autonomous and electric

Fourth is electrified mobility. “We need new

vehicle capabilities,” said Rojo. CIDETEQ

powertrains and standards that reduce our

is also supporting electrification projects.

carbon footprint. At Bosch we remain active

“CIDETEQ is an electrochemistry center

in powertrain electrification and we continue

in which we study electro deposits and

improving our ICE engines in our R&D

how chemistry produces electricity. We

center in San Luis Potosi. In Guadalajara,

develop batteries, fuel cells and other

we have our software development center.

elements,” says Montaño.

We are pushing forward that mobility is fun, wonderful and financially efficient,”

M exi co h a s th e re s o u rce s , p ote ntia l ,

said Watty.

infrastruc ture and people become an R&D destination. It only needs support

Research centers and universities are

and collaboration among all players in the

s u p p o r ti n g co m p a n i e s a c h i eve th e i r

country. “We have a clear vision of all that

autonomous and electromobility goals.

Mexico can achieve and we are committed

“ We have focused in the development

to provide all the tools it needs to do so,”

of e l e c tric a n d a uto n o m o u s ve h icl e s

says Gógnora.

TRACEABILITY, CLEAN ENERGIES: KEYS TO CARBON NEUTRALITY OEMs have set ambitious carbon neutrality

it s m a n u f a c tu ri n g c h a i n , “ p u rc h a s e d

goals but the supply chain not far behind

goods and services” accounted for 16.4

in reducing carbon emissions. Current

percent of its CO2 emissions. For that

strategies highlight two key elements:

reason , OEMS must push suppliers to

resource and energy management, and

also implement sustainability strategies.

supply chain traceability.

To d a te , m o s t s t r a te g i e s a r e b a s e d o n re d u ci n g e m is sio n s i n o p e ratio n s

“C arbon neutralit y requires a neutral

across the supply chain. “OEMs should

output of CO2 emissions. If a company is

understand that sustainability implies

generating CO2, it must mitigate that

a long-term strategy for a foundational

impact some other way,” said Pablo Rivero,

supply chain in which it is actively working

Country Manager of ForeFront Power.

to reach zero emissions. That also implies ethical material supplies,” said Ana Núñez,

“Carbon neutrality requires a neutral output of CO2 emissions. If a company is generating CO2, it must mitigate that impact some other way”

Pablo Rivero

Country Manager of ForeFront Power

Digital Supply Chain Center of Excellente Mexico at SAP. Nuñez explains that a functional strategy should be based in a mutual interest from OEMs and suppliers to build the foundations to implement a carbon neutrality strategy, which can be achieved through delivery p r o c e s s o p t i m i z a t i o n a n d e ffi c i e n t

Companies must first identify what lays

equipment, among many other tools .

behind most of their carbon emissions.

“Digitalization is not only about production

Toyot a ’s 2 02 0 e nv i ro n m e n t a l re p o r t

process but also to take data into account

shows that out of 15 categories in

to optimize decisions,” said Núñez

30

C on f e r ence H ighlights Resource management, par ticularly

“We used to design and built large solar

wate r a n d e l e c tri cit y, is e s s e nti a l to

parks, but due to ongoing changes on the

manufac turing operations , especially

regulatory realm we now have more than

once companies consider the role their

100 projects operating in a medium and

surrounding communities c an play in

small scale, most of them on site.” Forefront

their optimal operations. “Communities

builds the renewable energy facilities and

in a better position to interrupt industrial

then sells the electricity to the companies.

process in the automotive industry than in the mining sector, particularly with all

Collaboration between OEMs and

elements involved with water resources.

suppliers has be en essential to drive

Companies must perform acquire social

change. Companies are pushing to

licensing to perform these processes and

provide visibility and traceability of all

avoid being considered the enemy,” says

the components that go into the vehicle,

Luis Vera, Managing Partner at Vera y

from the engineering and design to the

Asociados. From a legal perspective, there

point when the vehicle reaches the end-

can be significant variations in the way the

customer, explained Nuñez.

water expelled by a plant is labeled but this is a matter for local or federal authorities.

“Most OEMs and suppliers monitor and measure their carbon footprint emissions

The first step in gaining public trust could

at cer tain point s of the chain due to

be a solid framework for water use, as Audi

existing regulations. But to ensure that the

México observed at its plant in San Jose

operation meets all regulations rules, the

Chapa, Puebla. “We are the first entity to be

entire process and components must be

waste-water-free in Puebla. We earned this

traceable. Companies should also evaluate

recognition thanks to our lagoon, where we

how those emissions will be replicated in

use rainwater for our processes instead

the production line and analyze how to

of freshwater,” Andreas Lehe, Former

optimize these routes until the vehicle

President of Audi Mexico, told MBN in 2019.

reaches the dealership floor,” said Núñez.

Electricity management is also key, as

Digital threads and resource management

the proper use of this resource can have

play a key role in both ensuring traceability

benefits beyond sustainability, it can impact

and providing visibility to the various

future contracts. “Auto part suppliers are

players within the supply chain. “The very

motivated by OEMs requirements to share

first strategy is to measure its carbon

their carbon neutrality goals,” said Rivero.

footprint,” says Rivero.

www.mexicobusiness.mx