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Vehicle Sales in Mexico Take Huge Hit Due to NAFTA Uncertainty

Mexican auto sales cratered in December and ended 2017 down 4.6 percent from a year earlier as rising inflation and uncertainty over the future of the North American Free Trade Agreement scared off consumers.

This story by Laurence Iliff originally appeared in Automotive News.

New light-vehicle deliveries slid 18 percent in December from a year earlier, putting sales for the year at 1.53 million units compared with a record 1.6 million in 2016, the Mexican Automobile Distributors Association said.

The results coincided with U.S. President Donald Trump’s first year in office, which created volatility in the value of the peso against the U.S. dollar and contributed to rising interest rates in Mexico to fight inflation.

Trump has threatened to exit NAFTA if the renegotiation of the pact is unsuccessful, build a border wall between the two nations and take further steps to reduce immigration.

Mexico’s political climate didn’t help consumer confidence going into a 2018 presidential election year with no clear front-runner in the ruling party, a resurgent leftist coalition and fragmented conservatives.

Among Mexico’s largest automakers, General Motors took the biggest hit with a drop of 30 percent last month and 16 percent in 2017. Nissan sales fell 26 percent in December and 9.1 percent for the year. Volkswagen dropped 4.1 percent last month and 5.4 percent for the year.

Toyota and Honda stayed in the black in 2017 with gains of less than 1 percent over the previous year.

The big winners were the relative newcomers to Mexico, Hyundai and Kia, according to data from the distributors association.

Hyundai’s sales rose 28 percent on the year and Kia’s rose 49 percent. Their combined sales represented about 9 percent of the Mexican auto market in 2017.

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