1/17/2025 Markets & Industries Report

Casting a spotlight on mexico

The global die casting market is on a trajectory of robust growth, projected to achieve a value of USD 112.14 billion by 2029, with a steady annual growth rate (CAGR) of 6.24% according to the research firm Mordor Intelligence. Amidst this dynamic landscape, Mexico has emerged as a prominent force in the industry, commanding an estimated 6% of the global market share.

Map of Central America with Mexico as the highlight

Mexico's Position in the Americas and the World

The Mexican die casting market has witnessed a remarkable surge, expanding by an impressive 63.6% between 2018 and 2022. This surge translated into a production increase of 400,000 metric tons, equivalent to the combined decline in the US/Canada and European markets over the same period.

Mexico holds the 12th position in the world's largest economies as of 2023. The automotive industry in Mexico is a cornerstone of its economy, contributing 4% to the national GDP and a significant 23% to the manufacturing GDP.

As the 7th largest vehicle manufacturing country globally, Mexico produced an impressive 3.5 million light vehicles in 2022, reflecting a remarkable 9.2% growth compared to the previous year. Notably, Mexico surpassed China as the leading exporter of vehicles to the United States in 2023, underscoring its pivotal role in the North American automotive supply chain.

Within the die casting landscape, Mexico counts with two industry giants: Nemak and Bocar, both recognized internationally for their scale and influence. In addition to these prominent players, the Mexican die casting ecosystem comprises approximately 100 smaller foundries, primarily operating in the lower clamping force range (below 1,500 tons). Further enriching the industry's diversity, Mexico hosts a presence of internationally recognized foundries hailing from the USA, Europe, India, Japan, and, more recently, China.

Market Structure and Key Players

The die casting market structure spans a multifaceted value chain encompassing various tiers:

Tier 3 (Smelting): focused on the production of raw materials, involving smelters and refiners who extract and process metals like aluminum, zinc, and magnesium.
Tier 2 (Founding): foundries and mills operate at this level, transforming raw materials into metal alloys suitable for die casting.
Tier 1 (Processing): companies specializing in processes such as heat treatment, surface finishing, and the manufacturing of equipment components.
OEMs (Assembly): at the top of the value chain, Original Equipment Manufacturers (OEMs) assemble finished products, utilizing die-cast components from the preceding tiers like classic brands Ford, General Motors, Stelantis and BMW, but also Asian newcomers such as KIA, MG, BYD and GAC Motors.

Within Mexico, the die casting market structure exhibits the following characteristics:

Business Model: manufacturers transform raw materials into finished goods, employing various die casting techniques, including pressure, vacuum, squeeze, semi-solid, gravity, and lost-wax/foam casting.
Raw Materials: aluminum constitutes the dominant raw material, accounting for approximately 80% of usage, followed by zinc (12%) and magnesium (8%).
Industry Sectors: the automotive industry claims the lion's share, representing 63% of die casting applications, followed by construction, electronics, aerospace, and other sectors.
Markets: the domestic Mexican market accounts for 54% of consumption, while international markets, including the USA, Europe, and Asia, absorb the remaining 46%.
Customer Segments: die casting companies cater primarily to Original Equipment Manufacturers (OEMs) spanning various industries such as automotive, heavy machinery, home appliances, electronic devices, aerial vehicles, and renewable energy devices.

Key Player:

Mexican Companies: Nemak, Bocar, Power-cast, Alcast, BM Castings, Limcasting, etc.
Global Companies: Linamar, Rheinmetall AG, Dynacast, Ryobi, Xusheng, etc.

Current Challenges and Opportunities

The Mexican die casting industry faces both challenges and opportunities that shape its trajectory:

Challanges:

1. Enactment of Stringent Emission Regulations: regulations such as the CAFÉ standards and EPA policies, pose a challenge to the industry, pushing manufacturers to adopt cleaner and more efficient production processes.

2. Supply Chain Disruptions: the COVID-19 pandemic exposed vulnerabilities in global supply chains, leading to material shortages and price volatility, impacting production and profitability. Fluctuations in raw material prices, particularly for aluminum and zinc, pose challenges to maintaining stable manufacturing costs and profit margins.

3. Acquisition and Retention of Skilled Labor: a shortage of skilled labor in the die casting industry, coupled with high staff turnover rates both within the industry and across borders, presents a challenge to maintaining operational efficiency and quality standards.

Oppurtunities:

1. Growing Demand for Lightweight Components: the automotive industry's push towards fuel efficiency and reduced emissions, driven by stringent regulations, fuels the demand for lightweight components, particularly aluminum die castings. This demand extends to other sectors like aerospace and heavy machinery, presenting growth opportunities for die casting companies. The rise of electric vehicles further amplifies this demand, as EVs require lightweight and durable components for battery housings and electric drivetrains.

2. Increased Investment Due to the Nearshoring Effect: Mexico's strategic location and favorable trade agreements have attracted international companies seeking to relocate their production facilities closer to their target markets in North America. This nearshoring trend drives investment in the Mexican die casting industry, creating expansion opportunities for existing players and attracting new entrants.

3. Technological Advancements: advancements in Industry 4.0 technologies and automation offer opportunities for enhanced production efficiency, product quality, and reduced reliance on large-scale skilled labor.

Trends and Future Development

Several trends are shaping the future development of the die casting industry in Mexico:

Vacuum Die Casting: the adoption of vacuum die casting is expected to accelerate, driven by its ability to produce high-quality, weldable components with minimal defects. Although pressure die casting remains the dominant process due to its higher productivity, the shift towards vacuum die casting is expected to continue, particularly for demanding applications requiring superior component integrity.
Increased Adoption of Aluminum in Transmission Parts: the demand for aluminum in transmission components is rising due to its lightweight and durable properties, crucial for improving fuel efficiency and meeting stringent emissions standards. This trend is expected to drive further growth in the aluminum die casting segment.
Giga-casting: this innovative manufacturing process is revolutionizing the die casting industry by enabling the production of large, complex parts as single pieces, reducing weight and manufacturing costs. This trend, driven by the demand for efficient electric vehicles, is expected to grow significantly, with major automakers like Tesla leading the way. Future developments will likely focus on overcoming challenges like high initial costs and technical complexities.

Top 3 Pains in the Die Casting Industry:

What has become most evident the last 4 years since the COVID-19 pandemic are the following:

1. Supply Chain Disruptions and Price Volatility: fluctuations in raw material prices, coupled with supply chain disruptions, directly impact profitability and make it challenging for companies to maintain stable operations.

2. Intense Competition: the die casting market is highly competitive, with pressure from both domestic and international players. Companies face challenges in differentiating their offerings, maintaining profit margins, and securing new business opportunities.

3. Limited Trade Show Budgets: it has become overwhelming for the key players in the industry to choose which trade shows to attend to with a limited budget since they are a significant expense involving various costs, including booth rental, stand construction, travel, accommodation, marketing materials, and personnel. Not only that, but key players experience pressure to achieve the best possible return on investment, expecting to see tangible results, such as lead generation, sales, and brand exposure. This involves careful consideration

In order to address these problems, Euroguss Mexico offers the best solutions through the biggest business development platform for participating companies:

1. Mitigating Supply Chain Risks: by bringing together the entire value chain, from raw material suppliers to OEMs, Euroguss Mexico provides a platform for companies to
diversify their supplier base, forge new partnerships, and gain insights into market trends
and supply chain dynamics. This access to a wider network of suppliers can help mitigate risks associated with disruptions and price volatility.

2. Fostering Business Development and Networking: Euroguss Mexico provides a dedicated space for networking, enabling companies to connect with potential customers, suppliers, and partners. The event's focus on showcasing innovative technologies and products helps companies differentiate their offerings and attract new business opportunities.

3. Optimize Trade Show Budgets: Euroguss Mexico 2025 is a comprehensive event that will cover the entire value chain which will reduce the need to attend multiple, specialized trade shows, making it a more cost-effective option. Euroguss Mexico 2025 will bring together OEMs, Tier 1, 2, and 3 suppliers, and supporting institutions, providing a platform for companies to connect with a wide range of potential customers and partners.

In conclusion, Mexico's die casting market presents a compelling landscape characterized by robust growth, a strong automotive industry foundation, and the influence of nearshoring trends.

While challenges like supply chain disruptions, skilled labor shortages, and intense competition persist, opportunities abound, driven by the demand for lightweight components, technological advancements, and the adoption of Industry 4.0 practices.

Euroguss Mexico serves as a strategic platform for companies to navigate these challenges, seize opportunities, and contribute to the continued growth and evolution of the Mexican die casting market. Come and be part of the most important event for the Industry in Expo Guadalajara on the 15-17th of October 2025.