Ernesto M. Hernandez

Ernesto M. Hernandez

President & Managing Director, General Motors Mexico
Leopoldo Orellana

Leopoldo Orellana

President, Mazda Motor de México

What is the significance of the Mexican market?

ERNESTO M. HERNÁNDEZ GM's international operations are fundamental for the future of the company. There are many different regions and countries growing, such as China, India, and several in Latin America. In that context, Mexico is very important. On a manufacturing basis, Mexico is now ranked sixth of the 30 countries in which GM manufactures its products. Regarding the potential of the domestic market, Mexico is one of the top 10 markets in the world. Our contribution to manufacturing in North America is relevant and growing rapidly.

LEOPOLDO ORELLANA The strategy for Mazda was to try to be a global company. Mazda is not a major player in terms of volume if you compare it to Toyota, Nissan, or Honda. Those are the giants in Japan. Mazda is a smaller player in the world. Toyota produces 8 million vehicles in a year and Mazda produces 1.3 million vehicles. There is a big difference, but there is an initiative to turn Mazda into a really global business by going into the emerging markets. Mexico is an important emerging market in the auto industry. It may be the 10th or 12th largest market for automobiles in the world, so it was important for Mazda to be here. Mexico and Japan recently signed a trade agreement. That really triggered the final approval for this project. Mazda is now able to bring cars into Mexico duty free.

How would you characterize domestic demand?

EMH Customers have become more sophisticated and demanding. One of the key factors to satisfy them is service, and in that regard it may be easier for new players and brands to grow from zero. For established brands like GM or Chevrolet, we have to transform, recompose, and follow a new route. Service is very important and customer satisfaction is key. One of our commitments is that we will do anything to satisfy our customers. Our vision is to design, build, and sell the world's best vehicles. We know that we will attract new customers and maintain current customers by providing them with the highest possible satisfaction.

LO Since the crisis in 2009, the market has been steadily growing. It is not a high growth rate, but a steady growth rate, and I think that is going to continue. The public finance situation is very stable, the exchange rate is stable, and the trade balance is stable. The economy is stable and the market will keep growing steadily. There are a couple of factors holding back growth, however. The used car market is huge, and a lot of used cars are imported from the US. They are good cars, however, and it is fair competition, but it is a factor.

What is your strategy looking ahead?

EMH I am very optimistic about the future in Mexico. There is a rational reason for this as well as an emotional element. Considering the different studies we have carried out, Mexico is a very capable, qualified, and competitive manufacturing base. The country is producing many engineers and technicians—probably more than Brazil and the US. Other factors, such as the stability of the financial system, the autonomy of the country's central bank, and its progress toward a modern democracy are all important factors.

LO One of the challenges that I am facing now is to open up the Brazilian market. We have a plant in Mexico that can serve the domestic market and export to the US and Canada, but when the decision was taken to build this plant one of the main objectives was to open the Brazilian market. Brazil is the fourth largest automobile market in the world after the US, China, and Japan. Recently, the Brazilian government, which still presides over a closed economy, changed its rules. There is a trade agreement between Mexico and Brazil for the duty-free import of automobiles. But Mexican exports to Brazil were growing too much, and the Brazilian government renegotiated the terms of the agreement. That was after we had taken the decision to build the plant. Here we are, having decided to build a plant in Mexico to export to Brazil under certain rules, and all of a sudden those rules have changed.

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