Mexico's national association of heavy duty truck and bus manufacturers (ANPACT), reported the manufacture of commercial trucks grew 6% in July, producing 20,006 units, when compared against 18,863 units in July 2018.
Exports of trucks also increased 11.2% in July, with Mexican manufacturers sending 18,140 units abroad. For the first seven months of 2019, export of Mexican-made trucks increased 26.12%, compared to 2018.
Truck and bus makers with major plants in Mexico include Navistar International Corp (NYSE: NAV), Kenworth, Mercedes-Benz, Freightliner, Volkswagen, Volvo and Daimler. Officials with ANPACT said more than 95% of truck exports are destined for the United States and Canada.
"Motor transport is a strategic sector in Mexico – it generates more than 2 million jobs and contributes more than 6% of gross domestic product," according to a statement from Miguel Elizalde, president of Mexico City-based ANPACT, the country's truck and bus manufacturing chamber.
During the first seven months of the year, 124,220 heavy-duty vehicles were manufactured, an increase of 30.47% compared to the 95,209 units produced during the same period last year, according to ANPACT.
Officials with ANPACT said 2019 is shaping up to be the best year for exports of Mexican-made trucks since 2015, when 117,239 units were produced.
Elizalde said while exports of Mexican-made trucks remain positive, Mexico's domestic truck market is faltering.
"Although the accumulated figures are favorable, the production figures – have begun to be affected by the drop in sales in the domestic market," Elizalde said in a release.
Domestic sales of heavy-duty commercial trucks during August fell 61.2% to 1,668 units, compared with 4,301 units sold during August 2018, according to ANPACT.
"The fall of the local market is mainly due to uncertainty regarding the availability of ultra low sulfur diesel (ULSD), which is inhibiting the growth of domestic fleets," Elizalde added.
In July, the Mexican government implemented a new rule requiring pumping stations to sell ULSD. However, distribution of ULSD to gas stations has been slow as Pemex – Mexico's state-run oil company – continues producing high-sulfur diesel.
Another part of the new country-wide law requires truck manufacturers to only import, make and sell ULSD-run trucks starting in January 2021. However, according to a study from ANPACT, 20% of the pumping stations in Mexico still do not have ULSD.
"There are regions where the fuel is nowhere to be found," Elizalde said according to a report from Reuters.
Elizalde said the government needs to extend the period where trucks may still use Euro VI and EPA07, the current fuel standards in Mexico.
Truck and bus makers "would need 18-24 months to prepare factories, distribution chains, stores and sales forces for the change," Elizalde said.
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