Changing integration of North America's auto industry - evidence from vehicle production and powertrain sourcing

Résumé:

A relatively recent structural change to North America’s automobile industry has been the integration of Mexico into the region. That development culminated with the ratification of the North American Free Trade Agreement (NAFTA). The auto industries of the U.S. and Canada began integrating as far back as 1965, the year the two countries agreed on the Auto Pact. Today the industry’s operations are closely linked across the three North American countries. This paper looks for evidence on changes to the level of integration among the three North American countries. We look at the production and trade in light vehicles as well data measuring supply chain integration, including a novel set of detailed data on powertrain sourcing. Mexico features prominently in the analysis.