Mexico: Chinese vehicles account for 30% of imports and 20% of sales

“Near-shoring" encourages investment growth, but geopolitical concerns also emerge

2024/06/14

Summary
Nearshoring drives investment growth, while uncertainty rises due to U.S. - China tensions
Production and exports in 2023: 14% growth on the back of strong economies in North America and Mexico, for the second consecutive year
Sales and imports in 2023: Sales up 24%; vehicles imported from China accounted for 20% of the market
Chinese OEMs: Imports and local production surge; sales in Mexico up 2.8 times y/y
Tesla: Receives approval from Mexican authorities to build factory in Mexico, but concerns remain over delays in start of operations
Renault-Nissan Group: Production up 58%, supported by increased sales in the U.S.; domestic (Mexico) sales also strong
GM: Starts production of EVs; imports from China soar to 65% of domestic sales
VW: Production volume increased for the third consecutive year, preparing for EV production
Stellantis: Begins production of a large van in Mexico, its first mass-produced EV in North America
Ford: Continues to significantly increase production, with sales of the EV "Mustang Mach-E" also growing
Hyundai/Kia: Starting production of new compact sedan and considering EV production
Toyota: Began production of the new Tacoma, aiming to increase HV sales ratio
Mazda: Strong sales of CX-30 in the U.S. contribute to increased production
Honda: Production of its first EV model in North America begins at GM plant; domestic sales continue to shrink
Production Forecast by GlobalData: Mexican production will show limited growth through 2027, remaining at the 3.8 mn unit

Summary

Sei series, a compact crossover SUV produced in Mexico by Anhui Jianghuai Automobile Group Corp., Ltd. (JAC) (Source: JAC)

Automobile production and sales in Mexico continue to expand due to the growing demand in the U.S. market, the largest customer base, and the resulting revitalization of the Mexican economy. Furthermore, the recent trend toward "near-shoring" (production closer to the end user) against the backdrop of concerns over global geopolitical risks and supply chain constraints has increased Mexico's advantage as a production base adjacent to the US market, leading to a flurry of announcements of automobile-related investment plans.

About 90% of the vehicles produced in Mexico are destined for export, mainly to North America, while domestic sales are more clearly structured to meet demand by importing small cars from China, South America, India, and other countries. In 2023, the number of imported cars reached 904,000, accounting for 66.4% of total sales. Sales of Chinese-made vehicles increased by 53.2% y/y to 266,000 units, accounting for approximately 30% (29.4%) of all imported vehicles.

In 2023, vehicle sales in Mexico increased by 24.4% y/y to 1.36 million units. Sales of Chinese brand vehicles such as SAIC Motor, Chery Automobile, and Anhui Jianghuai Automobile Group (JAC) increased by 61.5% y/y to 135,000 units, accounting for approximately 10% (9.9%) of the market share. If imported vehicles manufactured in China by GM, Ford, and other manufacturers are included, Chinese brand and Chinese-made vehicles accounted for approximately 20% (19.5%) of the Mexican market.

In 2023, the presence of the Chinese auto industry in Mexico, which is aiming for global expansion, become even more pronounced, with U.S. OEMs increasing their imports and sales from their Chinese subsidiaries and imports of Chinese-brand vehicles, as well as many Chinese manufacturers showing enthusiasm for investing in production in Mexico.

On the other hand, the environment surrounding the Mexican auto industry is changing rapidly, as the U.S., which is about to hold a presidential election in November, expresses concern about the entry of Chinese manufacturers into North America and their rise in the supply chain, and trends in the U.S.-China conflict have become a major destabilizing factor.

This report, an update of our previous report (published in April 2023), provides an overview of the latest situation of the Mexican automotive industry and market, and summarizes the trends and announced plans of various industry companies, mainly major OEMs.

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Mexico: Chinese vehicles account for 30% of imports and 20% of sales

“Near-shoring" encourages investment growth, but geopolitical concerns also emerge

2024/06/14

Summary

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