In hot Mexico market, even troubled VW is thriving

VWs are still rolling off the production line in Mexico.
VWs are still rolling off the production line in Mexico.

Nacha Cattan / Bloomberg

In Mexico’s red-hot domestic auto market, even embattled Volkswagen AG is doing well.

While the German carmaker’s annual sales were set to decline worldwide for the first time in 11 years after it admitted to cheating on emissions tests, they gained more than 10 percent in Mexico through November.

It would be difficult for the brand to do poorly, said Mexico’s dealers association, when the local auto sector expanded almost 20 percent in 2015, beating estimates and records.

Customers are flooding Mexican showrooms so quickly that they’ve helped automakers take up slack from a recent lull in exports.

Mexico’s maturation from being a mere producer into a country with robust internal demand also suggests that the economy is gaining strength after a third straight year in which gross domestic product growth is forecast to expand by no more than 2.5 percent.

“When you buy a new car, you do so on the grounds of a more certain economic and labor outlook,” said Gabriel Lozano, JPMorgan Chase & Co.’s chief Mexico economist. “It reflects a growing local market and in the end, an improvement in purchasing power.”

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