Mexico

Last modification: 5 Apr 23
Introduction: 

Mexico, officially the United Mexican States, is a federal republic in the southern portion of North America. Andres Manuel Lopez Obador, also known as AMLO, has been the president since December 1, 2018.

Although growth returned quickly in 2010 after the 2008 global financial crisis, ongoing economic and social concerns include low real wages, high underemployment, inequitable income distribution, and few advancement opportunities for the largely indigenous population in the impoverished southern states.


Most of the population is found in the middle of the country between the states of Jalisco and Veracruz; approximately a quarter of the population lives in and around Mexico City

Thank you to contributors to the Mexico WikiFleet page: BDO;TIP Mexico

Chapter 1: Economic and business environment

Demographics

With an estimated population of 131 million (2022)

source: Worldometers
Capital

Mexico City (8.92 million residents)
Major cities

1. Mexico City (8.92 million residents)
2. Ecatapec (1.66mn)
3. Puebla (1.58mn)
4. Guadalajara (1.5mn)
5. Juárez (1.32mn)

 
Languages

Spanish
GDP

2022 (Nominal)
US$1.29 trillion (up 18% year-over-year)
US$9,847 per capita (non adjusted)

source: CountryEconomy

Mexico has the 15th largest nominal GDP and the 11th largest by purchasing power. The Mexican economy is strongly linked to those of its NAFTA partners, especially the United States.
Unemployment rate

3% (March 2022)

Source: Trading Economics
Main industries

Among the country's main industries are food and beverages, tobacco, chemicals, iron and steel, petroleum, mining, textiles, clothing, motor vehicles, consumer durables, and tourism.

Mexico is the 7th largest automotive producer in the world and employs around 1.7 million people. 
Currency

Mexican Peso
Interest rate

11% (February 2023)

Source: Trading Economics
Fleet Maturity Index (scaling)

Due to the impacts of the COVID-19 pandemic and correlating closedowns, overall vehicle production in Mexico droppped 27% in 2020 to 3.17 million units, being 967,479 passenger cars and 2.21mn commercial vehicles. (source: OICA)

In terms of challenges, secondary LCV market values may fluctuate over the next 1-2 years (2021-2022) followed by fleet resizing and structural changes in large enterprises. Vehicle registration constraints are slowing down LCV renewal plans, thus forcing fleet operators to opt for older vehicles to keep things up and running. Inventory constraints are resulting in reduced LCV offers. (Element Fleet Management)

Among the areas seeing growth are digital platforms for last-mile distribution, the electric vehicle (EV) commercial offer, tailor-made servicing solutions, and the implementation of telematics. The latter is being used to monitor fleets, maximizing driver safety and vehicle theft as well as operational efficiency (increasing sales, customizing routes, maximizing fuel efficiency, etc.)
Political key info

Andres Manuel Lopez Obador, also known as AMLO, has been the president since December 1, 2018. He is of the National Regeneration Movement party, a left-wing party which is also known as MORENA. 
Inflation

7.91% (January 2023)

Source: Trading Economics

Chapter 2 : Automotive market, segments & sales

Total Car park

2022

  •  Approximately 36.7 million passenger cars and pickups make up Mexico's light vehicle fleet, (one passenger vehicle per 3.6 inhabitants). The average age of a car in the country is 12 years.
  • Some 48.1 million if including heavy duty trucks. 

Source: INEGI 

Nationwide, more than 20,000 electrified vehicles are running along roads, with less than 10% being full electric. At least 2,000 EV charge points are in the country, much of this supported by the Supercharger network of Tesla.
New vehicle registrations (Cars, LCV, Trucks)

2022
1.09 million vehicles, up 7% year-over-year. (includes cars, SUVs, light trucks, and vans)

source: AMIA and INEGI
Top 5 brands (total market)

2022 sales

1. Nissan (168,940 units) -17.2%
2. General Motors [Chevrolet] (165,117) +29.7%
3. Toyota (96,387) +5.8%
4. Kia (89,140) +8.7%
5. Volkswagen (85,941) -12.7%

BMW (No. 15), Mercedes Benz (No. 16), and Audi (No. 18) are among the best-selling premium brands

source: Autocosmos / INEGI
Model preference top 5 (total market)

2022 sales

1. Nissan Versa: 48,055 (-31% year-over-year)
2. Nissan NP300 40,427
3. Kia Rio: 36,433 units
4. Chevrolet Aveo: 30,845 units
5. Nissan March: 28,986 units

source: Inegi

The best selling electric vehicle in 2021 was JAC E J7 (97 units sold), followed by JAC E 10X and MINI Cooper electric version.
Dealer network (including fleet dealer network)

Mexico has approximately 3,000 new car dealerships throughout the country. 
Used car market/renewal cycle

Remarketing
Historically, there has been no formal used-vehicle market, auctions of wholesalers in Mexico. At the end of contract, most companies give drivers the option to buy the vehicle, regardless of the kind acquisition. Almost 95% of fleet passeger cars sold to drivers are destined to family members.

Chapter 3: Company car market

Total Fleet Park (company cars)/Fleet penetration in total fleet sales

Considering that corporate fleet vehicles (light passenger vehicles, LCVs, and pickups) are estimated at some 10% of total fleet, there should be around 3.5 million units in the country. Government and public service vehicles are seen at 1.2 million (source: INEGI). 

In Mexico, approximately 74% of the multinational companies in the country offer company cars or vehicle benefits for employees, according to a 2020 Global Fleet study done in partnership with Willis Towers Watson.
Evolution fleet sales (last 5 years)

In 2021, light & heavy commercial vehicles sales rose 18% to 526,593 units from 445,217 (source: OICA)

2020:445,217 units
2019: 597,951 units 
2018: 538,415 units
2017: 546,236 units

  • Passenger cars, LCVs and pickups get replaced every 3-4 years on average
  • Large vehicles such as medium-duty trucks get replaced every 5-6 years on average 

Approximately 30-35% of the vehicles in Mexico are leased (1Q19, Element Fleet Management)
Top 5 fleet brands (fleet market)

Most popular fleet car brands in Mexico
Nissan
Volkswagen
Toyota
General Motors

 
Fleet Model preference top 5 (fleet market)

2022

Among the best selling pickups
Nissan NP 300
Toyota Hilux
Volkswagen Amarok

Popular LCVs
Volkswagen Caddy 5
Volkswagen Transporter 6.1
Volkswagen Crafter
Ford Transit

Popular automobiles
Nissan Versa
Kia Rio
Chevrolet Aveo

Chapter 4: Taxation & legislation

In 2017, Mexico raised its cap on ethanol in gasoline to 10% (E10) from 5.8%. E10 is allowed in Mexican cities, with the exeption of Monterrey, Guadalahara, and Mexico City. While ethanol producers and providers of fuel additive Methyl tert-butyl ether (MTBE) supported the initiative, some environmentalists are complaining that E10 puts too much burden on the air quality.

Mexico has already mandated tax breaks on EV imports as well as purchases. Governments are also working toward tax incentives on the ownership and circulation of these vehicles and seeking to charge lower fees at tollbooths, parking facilities and related services.

National electrification policies are also in the works, one being the country’s climate legislation target which involves cutting emissions in half by 2050 from the level seen in 2000.

 

Mexico

The basis of company car taxation in Mexico is reflected in this overview. Different types of taxes are considered here: taxes related to the registration of the vehicle, income taxes and VAT aspects. Expected future developments are also briefly listed, if any.

1. Car taxation

1.1. Vehicle purchase tax

 

Taxable event


Taxable person

 

Tax rate


Tax due

 

Alienation of cars and definitive import

 

Individuals and/or companies

 

2% to 17% depend of the price of the car

 

Monthly provisional payments due on the 17th of every month

 

1.2. Vehicle and Vessel Tax

 

Taxable event

 

Taxable person

 

Tax due

 

 

 

Taxable period

 

Ownership of a car individual or company

 

Owner of a car may be individual or company

 

State tax that is due the first three months of each year, the rate will vary depending the car price and the state where the plates were issued

 

Yearly

 

2. Income taxes


Mexican income tax rate for companies is 30% is the same rate for the car industry and for individuals it may vary depending of the income amount to a maximum of 35%.

 

3. VAT

3.1. Deduction


VAT rate in Mexico if 16% on the alienations of goods including cars, for companies and individuals which carries out business activities this VAT is creditable.
 

3.2. Leasing

 

Same rate for each leasing payment (16%)

 

4. Company car

4.1. Company car in personal tax returns – benefit in kind

 

Company cars in Mexico can only be deducted in an amount of $175,000 pesos ($9,200 USD aprox) for gasoline cars and in case of electric, natural gas or hybrid cars the amount is $250,000 pesos ($13,160 USD aprox) in a period of 4 years (25% every year)

5. Electric Vehicles

 

* Maximum deduction of $250,000 pesos for income tax purposes

* No new federal car tax

* No ownership tax

 

 

Source: BDO (2018) 

Leasing

Although 175,00 pesos is the maximum tax write off you can make when buying a company car over a four-year period, (250,000 if electric), the maximum set when leasing a vehicle for the same period would be 288,000 pesos (6,000 per month) or 410,400 pesos (8,550 per month) for electrified vehicles. This is 65% more. Keep in mind that maintenance and fuel is 100% deductible. Although maintenance is commonly included in leasing contracts, fuel is not. 

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Chapter 5: Car policies

In Mexico, it is very common to have a car as a benefit for job positions such as directors and managers. Nevertheless, fleet vehicles are also used as a company utility, being those for sales people and other operational job positions.
 
Company cars are commonly used for both private and business use, but an investigation will be made if more than the usual kilometers are driven.

There are some companies that have tracking devices to monitor the private use of cars. However, in general, it is not common to charge employees for personal use.
 
When it comes to cars breaking down and dealing with accidents and traffic tickets, each and every company policy differs.
 
One favored policy among some fleet managers is that cars require appropriate preventative maintenance.  If the user does not perform the required preventative maintenance and the vehicle correlatively breaks down, the user is charged for the repair.
 
In the case of an accident, the insurance deductible on the first accident is paid by the company, the deductible on the second accident is split 50/50 between the user and the company, and the third accident would be fully paid by the user. Finally, all traffic tickets must be paid by the user of the car.
 
Keep in mind that there are many variables in full service leasing. The challenge is to tailor make your leasing agreement in accordance with your clients needs.

Among the services appreciated by some customers are replacement cars in the case of an accident or a vehicle breaking down, and special insurance coverage such as those with low deductibles or those which cover even small damages.

Source: TIP Mexico
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Chapter 6: Funding methods

 

Overview of penetration of funding methods (buy or lease statement)

Outright purchasing is still the main method of acquision (+/-80%), followed by leasing and credit (+/-20%). Companies opt for outsourcing, either in the shape of open end lease (fleet management) or close end (operational) lease.
Type of suppliers (captive versus multibrand, international versus local…) French lessor ALD Automotive and American lessor Element Fleet Management are the biggest players on the Mexican operating lease market, managing some 25,000 vehicles each. Even though their core business remains full service lease, they were flexible enough to also offer fleet management services adapted to local preferences – and be successful at that. The biggest ‘local’ player, with some 15,000 vehicles, is Ariza, a joint-venture between Corporation Zapata and U.S.-based fleet management company ARI.
6.1 Outright purchase:  
Definition  
Pro’s and con’s  
Economic & legal ownership  
Business practices  
6.2 Renting (Finance lease) :  
Definition  
Pro’s and con’s  
Economic & legal ownership  
Business practices  
6.3 Full service leasing (operational leasing)  
Definition  
Pro’s and con’s  
Economic & legal ownership  
Business practices  
6.4 Fleet Management  
Definition  
Pro’s and con’s  
Economic & legal ownership  
Business practices  
6.5 Short term rental  
Definition  
Pro’s and con’s  
Economic & legal ownership  
Business practices  
6.6 Other funding methods  
   
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Chapter 7: Fuel

May 2, 2022
Average gasoline price per liter: US$1.14 (world average is US$1.33)
Average diesel price per liter: US$1.12 (world average is US$1.31)

September, 2021
Average electricity price per kWh Households: US$0.08 (world average is US$0.13)
Average electricity price per kWh Business: US$0.16 (world average is US$0.13)

Source: https://www.globalpetrolprices.com/gasoline_prices/

Fuel type segmentation

Petrol Diesel (not used for PC) EV
91% 8% 1%

Fuel price evolution

The new policy of unsupported fuel prices ends decades of government support and control of fuel prices in Mexico. With the falling value of the peso against the dollar since the start of the COVID-19 pandemic in the first quarter of 2020, Mexico is feeling the impact of free market prices for petroleum products. The price of gasoline has been changing daily across Mexico to follow the value of the peso and the cost of production.
 
Fuel card networks

Cash payments at fuel stations are still common. But the trend for electronic payments (credi cards) is also pushing the fuel card market.
The fuel card market presents two options:

- prepaid fuel cards
- post-paid fuel cards

Leasing and fleet management companies also launched fuel card programs.

Moreover, one of the largest debates in Mexico right now is the battle over whether or not to permit the increasing of ethanol blending in fuel to 10% (E10) from 5.8%. 

The plan, which allows E10 in Mexican cities (with the exeption of Monterrey, Guadalahara, and Mexico City), has been under debate since the country's energy regulatory commission starting pushing for its approval. 

While ethanol producers and providers of fuel additive Methyl tert-butyl ether (MTBE) are pushing for the increase, some environmentalists are complaining that E10 would put too much burden on the air quality.

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Chapter 8 : TCO components

When it comes to TCO, it really depends on the make and model of the cars being used. To reduce TCO, fleet managers can always suggest a particular model or models to a client but it is really the clients choice in the end.
 
Of course, fuel and energy consumption is a major part of calculating TCO and one key way to monitor energy use, as well as driver habits, is by offering telematics. In Mexico, this type of service is used for reducing vehicle theft as well as fleet sustainability.
 
Source: TIP Mexico
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Chapter 9: Safety, insurance and telematics

Safety

Car theft in México cost the insurance sector approximately 1 billion MXN monthly in losses (est. 2018), according to the Association of Mexican Insurance Institutions (AMIS). From April 2016 to March 2019, auto theft increased by 50% in the country. In 2018, 92,000 cars were stolen while the insured vehicle recovery index was only 38%, the lowest rate historically ever recorded in Mexico.

In 2019, the situation improved. From October 2018 to September 2019,  88,047 insured cars were stolen (241 per day), down 6.4% year-over-year, according to AMIS.

From January to September 2019, the most stolen cars models during the nine-month period were:
1. NP 300/Pickup
2. NissanTsuru
3. NissanVersa
4. NissanAveo
5. Volkswagen Vento

The models most commonly stolen with violent force during the nine months were:
1. Kia Sportage
2. Mazda CX5
3. Volkswagen Vento
4. Kia Río
5. Seat Ibiza

Wednesday was the most common day for a car to get stolen and the victims were people between 36-50 years of age. Approximately 75% were women.

Insurance agencies and fleet operators need to identify effective solutions to mitigate the impact these thefts have on their businesses and customers.

Insurance

Approximately 30% of Mexico's cars are insured. 

Mandatory third-party vehicle insurance has been required since January 2019.  

Telematics
A recent report from C.J. Driscoll & Associates, states that the commercial telematics market in Mexico accounts for over one million units in service. While the market is very fragmented, with no single solution provider accounting for more than a 5% market share, the consumer stolen vehicle recovery (SVR) and telematics market is far more concentrated with a few providers accounting for 2/3 of the units in service.
For-hire and private trucking fleets constitute the largest market for GPS fleet tracking solutions in Mexico.
The telematics market is expanding to governmental fleets, private security fleets, public transit, taxi services, public safety and telecom companies. It is estimated that 30-35% of fleets in Mexico have some sort of GPS device or recovering device in their vehicles (4Q19, Element Fleet Management)

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Chapter 10: Environment

Electrification

In terms of its transition to electrification, Mexico has been getting support from various electric vehicle manufacturers. It is one of the countries in Latin America with the greatest demand and lowest price for electric vehicles.

  • In 2021. approximately 6.45mn EVs on streets. 
  • National electrification policies are also in the works, one being the country’s climate legislation target which involves cutting emissions in half by 2050 from the level seen in 2000. The country is also seeking to have 35% renewable energy by 2024.
  • By 2025, Mexico is seen to be commercializing 61,400 electrified vehicles per year, being 57,200 HEV and PHEV and 4,200 EVs (Frost & Sullivan) 
  • 500 trolleybuses for zero-emission EV routes are expected to be running throughout Mexico City by 2024.
  • By 2030, 43mn expected on streets with new EV sales representing 15% of market 
  • In 2022, the country had more than 2,000 EV charging points spread throughout the country, mainly Tesla chargers. 

Although 175,00 pesos is the maximum tax write off you can make when buying a company car over a four-year period, it is 250,000 pesos for electrified vehicles. The maximum set when leasing a vehicle for the same period would be 288,000 pesos (410,400 pesos for EVs)

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Chapter 11: Mobility

Home to numerous new mobility participants as well as innovative business models, Mexico -  in addition to Brazil - is the benchmark of Latin America when it comes to new mobility solutions. Amidst the rise of mobile app-based mobility solutions, among those in Mexico are eHailing companies Uber (USA) and Laudrive (Mexico), as well as car-share company Carrot (Mexico).

According to January 2019 study carried out by financial services evaluator Coru.com and market studies firm Brad.Feebbo, more than half of the residents in the country are keen to ride hailing.

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Chapter 12: Key trends to watch

  • Due to its lower-priced cars, fleet electrification is a growing trend, more so with non-plugin hybrids for now but expect more full EVs in the near future.  
  • The market is gradually adopting market residual values instead of the traditional low residual values that were aimed at facilitating the purchase of the car by the driver at the end of the lease.
  • Vehicle renting and fleet management are on the rise. In 3Q19,  leasing and fleet management rose 8% and 10% respectively and rent-a-car rose 5%. Financial leasing, meanwhile, fell 1.58% in the same comparison.
  • Safety standards are evolving. Large companies are moving away from cheap models with little safety equipment and are now preferring international safety standards for their whole fleets (including ABS, airbags, seatbelts for all seats). 
  • Carsharing is on the rise, helped by traffic congestion and rising environmental awareness in large cities.
  • Telematics is expanding beyond driver behaviour analyses to personal security solutions (geolocalisation, immobilising stolen cars, ...).
  • Fuel prices are on the rise. From January 2017 to October 2019, the price at pumps rose approximately 25%.
  • By 2025, Mexico is seen to be commercializing 61,400 electrified vehicles per year, being 57,200 hybrid and plug-in hybrid electric vehicles (PHEV) and 4,200 electric cars, according to Frost & Sullivan. Mexico is one of the countries in Latin America with the greatest demand and lowest price for electric vehicles.

Some of the full-electric models available in Mexico

Brand

Model/Models

Audi

e-Tron

BMW

i3, i4, i8

Chevrolet

Bolt

Fiat

500

Ford

Mustang Mach E

Jac

E SEI 1, E SEI 2, E SEI 4

Jaguar

I-Pace

Mercedes-Benz

EQC

Nissan

Leaf

Porsche

Cayenne SE, Panamera SE

Renault

Twizy, Kangoo Z.E.

Tesla

Model 3, Model S, Model X, Model Y

Zacua

M2, M3

 
 

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