December 6, 2017 / 6:05 PM / in a year

UPDATE 1-Mexico's auto exports surge, domestic sales fall

(Adds details on auto sector performance, comments from executives)

MEXICO CITY, Dec 6 (Reuters) - Mexican auto exports rose 12 percent in November compared with last year despite lower U.S. sales, the country’s main auto industry group said on Wednesday, in a sign of the growing importance of alternatives to Mexico’s main foreign market

Despite the rise in exports, it was the lowest growth rate since August, when exports fell 0.8 percent. Exports were driven by increased demand from Canada, Europe and Asia, compensating for a 1 percent decline in shipments to the United States.

Eduardo Solis, president of the Mexican Automotive Industry Association, said it was too soon to say companies were looking for alternatives to exports to the United States, but that the numbers were evidence of Mexican industry’s diversified markets.

Domestic sales slumped 8.5 percent, although they are expected to stabilize next year, said Guillermo Rosales, deputy director of the Mexican association of automobile distributors (AMDA).

Mexico produced 332,449 light vehicles in November, a record for that month. Overall production was up 4.5 percent. Mexico’s auto exports, which are primarily bound for the United States, rose to 274,520 vehicles in the month.

The auto sector has become a growth engine for the Mexican economy and an export hub due to the North American Free Trade Agreement (NAFTA). Manufacturers have been lured to the sector by cheaper labor and numerous free trade agreements.

But the industry has been plunged into uncertainty by U.S. President Donald Trump’s threats to pull out of NAFTA if he cannot secure more favorable terms for the United States, particularly in the auto sector.

The Trump administration wants half of the content of all North American-built autos be produced in the United States and that the regional vehicle content requirement be increased to 85 percent from 62.5 percent.

Association President Solis criticized the proposal as “unachievable.”

“We are going to the next round with the conviction that we should maintain firm our position on rules of origin,” he said at a news conference. (Reporting by Sheky Espejo; writing by Julia Love; editing by Jonathan Oatis)

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