Dj Vu in Mexico

The Asian invasion is happening again in North America, only this time the target is Mexico.

Asian auto makers are gaining market share rapidly in a country that has been a solid base for both the U.S. Big Three and Europe's Volkswagen AG.

Asian market share for 2005 stood at 29%, according to Ward's data, equaling the 20-year high set in 1987 by the only Asian auto maker selling in Mexico at the time, Nissan Motor Co. Ltd.

Nissan has been selling cars in Mexico since the 1960s, and Honda Motor Co. Ltd. came on the scene 10 years ago. Toyota Motor Corp. (2002) and Mitsubishi Motors Corp. (2003) are relative newcomers.

Mazda Motor Corp. came on board in October, when it began selling the Mazda3, Mazda5 and Mazda6 in the country's three major cities. Mazda plans to expand its dealer network from four locations to 10 early this year.

Asian OEMs over the last five years have gained at least one percentage point of market share each year in Mexico, growing from an overall 23.3% in 2000 to 27.5% in 2004.

By comparison, General Motors Corp. (includes Suzuki), Ford Motor Co. and DaimlerChrysler Corp. (includes Mercedes-Benz) saw their combined market share fall from 55.7% in 2000 to 49.5% in 2004. However, 2005 market share for the group grew to 50.9%, according to Ward's data.

GM placed No.1 in light-vehicle sales in Mexico in 2005 with 244,694 units, edging out Nissan.

European auto makers have seen their market share in Mexico, after six years of growth, tumble from 24.5% in 2003 to 23.7% in 2004 to 20.2% in 2005.

VW, in particular, has struggled to hold its share in the marketplace. VW closed 2005 with a market share in Mexico of 15.5%. In 1994, the German auto maker held 27.3% of the light-vehicle market.

Since the signing of the North American Free Trade Agreement in 1994, and recent FTAs inked between Mexico and Brazil and Japan, the majority of vehicles now sold in Mexico are imported, says Paul Ballew, GM executive director-global market and industry analysis.

He characterizes Mexico's new-car market as “one of the more open markets around the globe.”

Indeed, the Mexican industry has grown at a feverish pace: from 183,385 light vehicles sold in 1995, to 1,089,665 in 2004; the first time more than 1 million units were sold in a single year. In 2005, the overall growth continued, reaching 1,125,952 deliveries.

And, while some Asian auto makers, such as Nissan and Honda, have seen sales falter from year to year due to new-market volatility, sales of Asian brands, overall, have accelerated from 42,602 light vehicles in 1995 to 326,492 in 2005.

Global Insight Senior Analyst Rebecca Lindland says the lack of a domestic brand has paved the way for imports.

She points to Toyota's quick rise to 3.1% market share today as proof. In 2002, its first full year in Mexico, Toyota registered 3,836 light-vehicle sales. In 2005, it saw 35,318 deliveries.

The Japanese auto maker entered Mexico with three models: the Camry, Corolla and 4Runner SUV. It now boasts a lineup of seven light trucks and five cars.

Despite Toyota's rise, Nissan's Tsuru small sedan, basically an '84 Sentra, is the best-selling car in the country, with 68,201 deliveries in 2005.

Competitively priced vehicles and a relatively young new-car market have contributed to the Asian brands' fast growth in Mexico.

It remains to be seen whether Hyundai Motor Co. Ltd., known for having some of the most competitively priced vehicles in the world, will enter the market. A company spokesman says there are no plans to sell the Hyundai brand in Mexico at this time.

The South Korean auto maker already has a presence in Mexico, of sorts. DaimlerChrysler Corp. currently sells the Hyundai Atoz as a Dodge small car. The deal is a remnant of DC's former 10.5% stake in Hyundai.

Hyundai not withstanding, Asian brands will continue to see growth in Mexico, but the Big Three and Volkswagen will remain strong.

Of Mexico's current top-selling new-car brands, Global Insight predicts that by 2010 Nissan will lead, with a 21% market share; followed by GM with 19.7%; Ford and VW each at 16.0%; and DC's 11.7%. Toyota will trail with 4.3%.