Car Sales, Fuel Economy and Decarbonization in Mexico

Abstract

The car market in Mexico has undergone substantial change over the last twenty years, as sales have increased dramatically and as policy measures have been introduced to improve fuel economy so that decarbonization targets can be achieved. The argument presented in this paper is that overall fuel economy is driven by vehicle sales and the fuel economy standards imposed. In addition, this picture is complicated by the purchasing preferences of buyers, and this might reduce the effectiveness of the policy measures introduced. A case study approach allows analysis of the shifts in transport policy (2003–2020) to be undertaken by linking the fuel consumption of cars (L/100 km) to the purchasing patterns of consumers, and from this estimate the levels of CO2 emissions. From the empirical analysis, it is found that, although there have been fuel economy gains every year, this is countered by (a) increasing sales of SUVs, and (b) a car market that is increasingly being dominated by larger cars. The current fuel standards are not sufficient to control the continued growth in fuel consumption, and levels of carbon emissions are continuing to increase. In conclusion, tighter emissions standards are needed, together with stronger governance structures and a range of further policy measures to improve car efficiencies and limit growth of the use of larger vehicles.

Keywords

• gasoline
• emissions
• car sales
• decarbonization