Mexican truck and bus output fell sharply at the end of last year due in large part to doubts over the future of a new diesel rule that would require that only vehicles using cleaner-burning fuel are made and sold, according to a local trade group.
The assembly of trucks and buses fell nearly 38% in December, data from trade association Anpact showed, in line with the falling production of heavy vehicles since August.
Despite the decline in December 2019 was a record year for production, up 12% from 2018, according to Anpact, whose members include Navistar International Corp (NAV.N) and Volkswagen (VOWG_p.DE).
The trade group attributed the production decline to companies’ hesitation to update their fleets amid uncertainty about a rule that would mandate the use of clean diesel starting in 2021.
Concerns about the rule remain because Pemex will not be required to produce, distribute and sell ultra-low-sulfur diesel (ULSD) until 2025, potentially leaving transportation companies without a guaranteed supply of fuel.
Anpact has asked Mexico’s environmental ministry to modify the rule so that vehicles running on conventional diesel can coexist with those running on ULSD until the supply of clean diesel is guaranteed nationwide.
Exports, which represent 85% of production, fell 27.4% in December compared with the same month in 2018, hit by lower demand in the United States and Canada, Anpact said. The declining demand has also hit production figures, the group said.
However, exports were up 13.9% in the year overall, Anpact said.