This article is written by Austin Garcia
Mexico has emerged as a significant player in the global automotive industry, with its strategic location, skilled workforce, and robust manufacturing capabilities. The automotive sector accounts for 17.6% of Mexico’s manufacturing sector, highlighting its importance to the country’s economy. A substantial portion of vehicles produced in Mexico are exported. Specifically, 88% of vehicles produced in Mexico are exported, with 76% destined for the United States. This underscores Mexico’s role as a key supplier in the global automotive supply chain.
Mexico holds the seventh rank globally in vehicle production, consistently maintaining this position for the third consecutive year. In 2023, Mexico produced 4,002,047 vehicles, according to data from the International Organization of Motor Vehicle Manufacturers (OICA). This places Mexico in close competition with its counterparts, Germany (ranked sixth with 4,109,371 vehicles) and South Korea (ranked fifth with 4,243,597 units). The global vehicle production witnessed a significant surge, surpassing 93 million units in 2023, marking a notable recovery from the pandemic-induced downturn in previous years.
Several established automakers have set up manufacturing facilities in Mexico. These include Audi, BMW, Ford Motor Company, General Motors, Honda, Hyundai, Kia, Mazda, Mercedes Benz, Nissan, Stellantis, Toyota, Volkswagen, and Tesla. These companies have capitalized on Mexico’s competitive advantages, including its strategic location, free trade agreements, and skilled labor force. In addition to passenger vehicles, Mexico is also a major manufacturer of heavy-duty vehicles for cargo. It ranks as the world’s fifth-largest manufacturer of such vehicles.
The automotive sector is one of Mexico’s most significant industries, employing over one million people nationwide. This sector provides high-quality jobs and contributes significantly to the country’s economic development. The Mexican Automotive Industry Association (AMIA) estimates that Mexico will become the fifth-largest automotive producer in the world by 2025. This projection underscores the potential for growth in Mexico’s automotive industry.
The United States-Mexico-Canada Agreement (USMCA), which went into effect on July 1, 2022, included changes to the rules of origin for the automotive sector. These changes have implications for the sourcing strategies of automakers operating in Mexico. Despite the prevailing view that the United States may be at a disadvantage in this dispute, our experts at TradeFlex can help identify potential opportunities that could be capitalized upon through a solution rooted in Mexican manufacturing. TradeFlex happy to assist you in navigating the potential impacts of retaliatory tariffs.
Here at TradeFlex we provide business model analysis, manufacturing management strategies, duty tariff optimization , compliance management, regulatory consultation, duty reduction programs, supply chain and tariff engineering, and cross-border solutions. With over 30 years of expertise, we help businesses land softly in Mexico, ensuring efficient, compliant, and cost-effective cross-border operations. Come work with us today at https://trade-flex.com.
