Automotive Manufacturing in Mexico: Industry Overview

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Mexico’s automotive industry continues to solidify its position as a global powerhouse, achieving historic milestones in 2024 and establishing itself as the world’s fifth-largest vehicle producer. With record-breaking production and exports, coupled with a rapid transition to electromobility, Mexico represents an unparalleled opportunity for manufacturers seeking to optimize their North American operations.

Mexican Automotive Industry: A Global Leader

The Mexican automotive industry remains a cornerstone of the nation’s economy, accounting for approximately 3% of GDP and 18% of manufacturing production—making it the second most important industry after food processing. The sector directly supports approximately 1.9 million jobs and represents 32% of Mexico’s total exports to foreign markets.

Mexico’s Global Standing (2024)

In 2024, Mexico achieved a historic milestone by becoming the fifth-largest vehicle producer globally, surpassing both Germany and South Korea. This achievement is particularly remarkable given the 1% decline in global automotive production during the same period.

• Global Ranking: 5th largest producer worldwide (up from 6th)
• Production Volume 2024: 3.99 million units (5.6% increase over 2023)
• Record Exports 2024: 3.479 million units (5.4% increase, highest in history)
• Export Leadership: 4th largest vehicle exporter globally (behind Germany, Japan, and United States)
• Auto Parts: 5th largest manufacturer worldwide (behind China, United States, Japan, and Germany)

Historic Production and Export Records

The year 2024 marked unprecedented achievement for Mexico’s automotive sector:

Production Achievements

• 2024 Total Production: 3,989,403 units—the highest in Mexican automotive history, surpassing the previous 2017 record of 3,933,154 units
• Month-over-month Growth: Consistent production increases, with October 2024 reaching 382,101 units, the second-highest monthly record
• Plant Capacity Utilization: Up to 95% across major manufacturing facilities

Export Performance

• 2024 Exports: 3,479,086 units shipped to 120+ countries
• United States Market: 2.77 million units (79.7% of total exports)
• North American Integration: 18% of all light vehicles sold in the United States in 2024 were assembled in Mexico
• Additional Markets: Canada, Germany, Brazil, Colombia, Puerto Rico, United Kingdom, Saudi Arabia, UAE, and Chile

Domestic Market Strength

• 2024 Domestic Sales: 1,496,797 units (9.8% increase over 2023)
• Market Recovery: Domestic sales surpassed pre-pandemic levels and approached the historic highs set in 2016
• December 2024: 146,356 units sold domestically

The Electric Vehicle Revolution in Mexico

Mexico is rapidly transforming into a major hub for electric vehicle (EV) production and electromobility, representing one of the most significant shifts in the industry’s recent history.

EV Production Milestones

2024 Production

• Total EV Units: 206,870 electric vehicles produced
• 2025 Projection: 250,000+ EV units (21.17% increase over 2024)
• Production Growth: 72.27% increase in early 2025 vs. same period in 2024

Leading EV Models Produced in Mexico

• Ford Mustang Mach-E: 29,839 units
• Chevrolet Equinox EV: 32,321 units
• Chevrolet Blazer EV: 13,805 units
• Jeep Wagoneer S: 8,331 units (rapid growth)
• Honda Prologue: 24,575 units
• Cadillac Optiq: 11,966 units

Major EV Investments

Announced Investments (2024)

• 68 electromobility sector investments announced
• Total Investment 2024: $2.55 billion in automotive sector
• Projected 2025: $2.7 billion in investments

Key Manufacturer Commitments

• Ford: Manufacturing Mustang Mach-E at scale
• General Motors: Converting Silao plant to EV production; new Coahuila facility for EV expansion
• Tesla: $5 billion Gigafactory near Monterrey announced (currently delayed due to tariff uncertainties)
• BMW Group: EV production expansion
• Toyota: Hybrid and EV production at Guanajuato plant (100,000-unit annual capacity)
• Nissan: $700 million investment for facility modernization

EV Supply Chain Expansion

Supplier Network Growth

• 453 companies now active in electromobility sector (37.1% increase in seven months)
• 170+ Tier 1 & 2 providers of electromobility and electrification components
• 29 technical subcategories across nine industrial areas including:
  • Battery systems and battery pack manufacturing
  • Electric powertrains and motors
  • Thermal management systems
  • Power electronics and control systems
  • Charging infrastructure components

Emerging Manufacturing Hubs

• Traditional Centers: Guanajuato, Coahuila, Querétaro, San Luis Potosí, Nuevo León
• Emerging Hubs: Durango and Puebla (new Tier 2 and Tier 3 centers)

EV Market Growth

2024 Sales Performance

• Total Electrified Vehicles Sold: 200,000 units (70.2% increase over 2023)
• Pure EVs: 13,292 units
• Plug-in Hybrids: 6,560 units (53.9% increase)
• Conventional Hybrids: 68,417 units (27.2% increase)

2025 Sales Projections (vs. Actual Below)

• Estimated Total: 147,482 electrified units (18.6% increase over 2024)
• Annual Growth Rate: 25-30% projected through 2030

Charging Infrastructure Development

Current Infrastructure (Q1 2025)

• Total Charging Points: 47,456 (5.5% increase from end of 2024)
• Private Network: 43,942 points (92.5%)
• Public Network: 3,514 points (7.5%)
• Most Common Connector: CCS1/J1772 (8,240 units installed)

Actual EV Sales Data Through October 2025

• Sales projections were overly optimistic. The EV Market Growth report anticipated 147,482 electrified-vehicle sales and 25–30% annual growth through 2030. As of October 2025, 113,960 electrified vehicles had been sold, and analysts expect year-end sales of approximately 130,500 units—a modest approximately 5% increase over 2024 rather than the projected 18.6%. Latam Mobility now projects 10–20% annual growth toward 2030.
• Infrastructure growth outpaced the forecast. Instead of the projected 47,456 charging points, the network expanded to approximately 54,080 chargers by Q3 2025. Nearly 94% of chargers are private, and the CCS1/J1772 connector continues to dominate, with only 1,781 of its 8,240 connectors available publicly.
• Public charging remains a bottleneck. Despite growth in private chargers, Mexico only had 3,825 public charging points by September 2025. This limited network restricts long-distance travel and slows the adoption of fully electric vehicles.
• Hybrids remain mainstream. Conventional hybrids represented the majority of electrified-vehicle sales in 2025. Consumers view hybrids as a transitional technology while waiting for lower EV prices and more public charging.

Government Targets

• 50% EV sales by 2030
• 100% electrified sales by 2035
• Significant investments in public charging corridors and infrastructure

USMCA: Full Implementation and Regional Content Requirements

The United States-Mexico-Canada Agreement (USMCA), which came into effect on July 1, 2020, has now reached full implementation. The agreement has transformed North American automotive manufacturing with stricter regional content requirements.

USMCA Requirements (Fully Implemented)

Light Vehicles

• 75% Regional Value Content (RVC) required (up from NAFTA’s 62.5%)
• 40-45% Labor Value Content: Must be produced by workers earning at least $16 per hour
• Deadline Met: Requirements fully phased in as of 2023

Heavy Vehicles

• 70% RVC requirement with continuing phase-in through 2027
• 45% wage rate requirement in areas with minimum $16/hour wages

Steel and Aluminum

• 70% of steel and aluminum used must be sourced from North America
• 75% minimum for essential components

USMCA Performance (2020-2024)

Since its implementation, USMCA has delivered significant results:

• Trade Increase: 46-50% growth in goods and services trade within North America
• Investment Surge: 134-136% increase in capital investment, reaching $219 billion
• U.S. Exports: Up 46% to Mexico and Canada since USMCA took effect
• Nearshoring Boom: Massive manufacturing relocation to Mexico to comply with regional content rules

2025 Tariff Developments and USMCA Exemptions

Current Situation

In early 2025, President Trump imposed 25% tariffs on imports from Mexico and Canada under the International Emergency Economic Powers Act (IEEPA), citing concerns about fentanyl trafficking and immigration. However:

• USMCA-Compliant Goods: Exempt from tariffs indefinitely
• Non-Compliant Goods: Subject to 25% tariffs
• Coverage: Approximately 84% of Mexico-U.S. trade remains tariff-free under USMCA exemption

Industry Impact

The tariff situation has created uncertainty but also reinforced the value of USMCA-compliant manufacturing. Companies manufacturing in Mexico under USMCA frameworks can bypass significant tariffs that affect non-North American manufacturers.

Looking Ahead: 2026 USMCA Review

The agreement includes a mandatory six-year review in July 2026, which will address:

• Critical minerals and supply chain security
• Electric vehicle supply chain development
• Labor standards and the Rapid Response Mechanism
• Reducing dependence on Chinese inputs
• Semiconductor and advanced manufacturing cooperation

Major Automotive Manufacturers in Mexico

All major global passenger vehicle producers maintain significant operations in Mexico:

Established OEMs

• Volkswagen
• Nissan
• General Motors (22.3% market share in production – highest)
• Honda
• Audi
• Toyota
• Hyundai
• Volvo
• Stellantis (Chrysler Fiat)
• Ford
• Mazda
• BMW Group
• Mercedes-Benz
• Kia

Heavy Vehicle Manufacturers

• Scania
• Freightliner
• Cummins

New Entrants (Primarily Chinese)

• BYD (targeting 80,000 unit sales in 2025)
• JAC Motors
• MG Motor
• Chery
• Great Wall
• Jetour
• Foton

2024 Production Performance by Manufacturer

Top Performers (Growth)

• General Motors: 23% increase (maintained leadership with 22.3% market share)
• Honda: Double-digit growth
• JAC: Double-digit growth
• Ford: 47.7% increase in Q4 2024
• Kia: 25% growth in Q4 2024

Manufacturers with Declines

• BMW: -19.0%
• Audi: -17.6%
• Mercedes-Benz: -15.3%
• Stellantis: -10.3%

Auto Parts Production and Supply Chain

2024 Auto Parts Production

• Total Value: $124.484 billion (3.52% growth over 2023)
• Global Position: 4th largest auto parts manufacturer worldwide, and 1st supplier to the United States

Tier 1 and Tier 2 Supplier Network

Tier 1 Suppliers

• Approximately 600 Tier 1 companies operating in Mexico
• 90 of the world’s top 100 Tier 1 companies have presence in Mexico
• Direct suppliers to OEMs (Original Equipment Manufacturers)

Most Produced and Exported Components

• Wire harnesses
• Seats and components
• Engines and motors (including electric motors)
• Transmission systems and gearboxes
• Die-cut and stamped parts
• Axles
• Brake mechanisms
• Lighting systems and appliances
• Safety systems (airbags, seat belts)
• Battery systems and power electronics (growing)
• Electric powertrains and components (emerging)

Tier 2 Network

Extensive network of Tier 2 suppliers providing components to Tier 1 companies, creating opportunities for strategic alliances between OEMs, Tier 1, and Tier 2 suppliers.

Strategic Advantages of Automotive Manufacturing in Mexico

Cost Competitiveness

Labor and Production Costs

• Production costs in Mexico are significantly lower than in North America or Europe
• Highly skilled workforce with decades of automotive manufacturing experience
• Competitive wages combined with high productivity
• $16/hour minimum for USMCA-compliant labor content creates middle-class manufacturing jobs

Trade Agreement Access

Unparalleled Market Access

• 14 Free Trade Agreements covering more than 50 countries
• USMCA: Duty-free access to United States and Canada for qualifying products
• EU-Mexico FTA (TLCUEM): Since 2000, most industrial products imported from and exported to EU are tariff-exempt
• Strategic Position: Access to markets representing over 1 billion consumers

Geographic and Logistical Advantages

Strategic Location

• Proximity to United States: Major market access with reduced shipping times and costs
• Access to South America: Positioned to serve growing Latin American markets
• Pacific Coast Access: Ports for Asian trade
• Gulf Coast Access: Atlantic shipping routes
• 24 of Mexico’s 32 states have automotive and auto parts manufacturing presence

Infrastructure and Industrial Ecosystems

World-Class Infrastructure

• Modern manufacturing facilities and industrial parks
• Established automotive clusters with complete supply chains
• 95% plant capacity utilization demonstrating efficiency
• Robust logistics networks connecting manufacturing to ports and borders
• Growing charging infrastructure for EV transition

Foreign Direct Investment Climate

Investment Trends

• 2024 FDI: $2.55 billion in automotive sector
• 2025 Projected: $2.7 billion
• Nearshoring Wave: Companies relocating from Asia to Mexico to comply with USMCA and reduce tariff exposure
• Strong legal framework for intellectual property protection
• Government incentives and support programs

Nearshoring and the China Factor

Mexico has emerged as the primary beneficiary of nearshoring trends, particularly as companies seek to:

Diversify Away from China

• Reduce supply chain vulnerabilities exposed during COVID-19
• Comply with USMCA regional content requirements
• Avoid U.S. tariffs on Chinese goods (currently 147.6%)
• Reduce geopolitical risk

Mexican Government Strategy

• Increasing regional content: Sheinbaum administration pushing to increase value-added automotive production in Mexico
• Reducing Chinese inputs: Strategic focus on developing North American supply chains
• Import substitution policies: Recent tariff increases on non-preferential partners (disproportionately affecting China)

Competition and Collaboration

While Chinese manufacturers are entering the Mexican market (BYD, JAC, Great Wall, etc.), Mexico is simultaneously working to:

• Build independent supply chains for critical components
• Develop domestic battery production capabilities
• Leverage critical mineral resources (7th globally in copper production; top-3 U.S. supplier for 14 of 50 critical minerals)

Critical Minerals and Battery Production

Mexico’s Mineral Resources

• Copper: 7th largest global producer (743,000 metric tons in 2023)
• Critical Minerals: Top-3 U.S. supplier for 14 of 50 critical minerals
• Lithium: Emerging as key player in lithium battery supply chain
• Rare Earth Elements: Strategic positioning for EV component manufacturing

Battery Manufacturing Development

• Lithium-ion battery production facilities in development
• Focus on battery pack assembly for co-location with EV assembly plants
• Investment in battery recycling and closed-loop systems
• Critical for maintaining EV production independence

Technology and Innovation: High-Tech Manufacturing

Mexico’s automotive sector is increasingly integrated with advanced technology:

High-Technology Integration

• 5-10% annual growth in high-tech manufacturing over past decade
• AI-powered smart manufacturing implementation
• Advanced robotics and automation (95%+ capacity utilization)
• High-performance materials development

Supporting Infrastructure

• IMMEX 4.0: Modernized manufacturing framework for semiconductors and EVs
• Kutsari Program: Semiconductor design center to strengthen innovation
• Foxconn AI Server Facility: $690 million investment, production starting 2025
• Partnership with Nvidia for AI manufacturing capabilities

Environmental and Sustainability Commitment

Government Climate Targets

• 50% reduction in carbon emissions by 2050
• 50% EV sales by 2030
• 100% electrified vehicle sales by 2035
• Renewable energy development supporting EV charging infrastructure

Industry Initiatives

• Lean manufacturing principles minimizing waste
• Closed-loop recycling systems
• Energy-efficient processes
• Sustainable materials sourcing

Challenges and Opportunities

Current Challenges

1. Tariff Uncertainty

• Ongoing trade tensions between U.S. and Mexico
• Non-USMCA compliant goods face 25% tariffs
• Legal challenges to tariff authority ongoing

2. EV Infrastructure Gap

• Only 7.5% of charging stations are public (3,514 of 47,456)
• Need for rapid expansion of public charging network
• Range anxiety limiting consumer adoption

3. Investment Slowdown in EVs

• First half 2025: $78.6 million in EV investments (97.4% decrease vs. 2024)
• Tesla Gigafactory delay due to tariff concerns
• Uncertainty affecting long-term planning

4. Skills Development

• Need for workforce training in EV technologies
• Battery manufacturing expertise required
• Software and electronics skills for advanced vehicles

Significant Opportunities

1. USMCA-Compliant Manufacturing

• Tariff exemptions for qualifying production
• Protected market access to U.S. and Canada
• Competitive advantage over non-North American manufacturers

2. Electromobility Leadership

• Positioning as North American EV hub
• Complete supply chain development
• Battery and critical mineral advantages

3. 2026 USMCA Review

• Opportunity to strengthen regional integration
• Focus on EVs, semiconductors, and critical minerals
• Labor standards creating quality jobs

4. Nearshoring Momentum

• Continued relocation from Asia
• Supply chain diversification trends
• Geopolitical alignment with North America

Why Choose Prince Manufacturing for Automotive in Mexico

Prince Manufacturing offers comprehensive contract manufacturing solutions specifically designed for the automotive sector, with deep expertise in both U.S. and Mexican operations.

Our Capabilities

Binational Manufacturing Excellence

• Integrated operations across United States and Mexico
• Ability to optimize supply chains for USMCA compliance
• Flexibility to manufacture in optimal locations based on cost, tariffs, and logistics

Automotive Expertise

• Decades of experience in automotive component manufacturing
• Tier 1 and Tier 2 supplier relationships
• Quality systems meeting OEM specifications
• Advanced manufacturing technologies including automation and robotics

Metal Fabrication and Assembly

• Comprehensive fabrication capabilities
• Forming, stamping, and die-cut operations
• Welding and assembly services
• Surface treatment and finishing (including nickel plating and powder coating)

Supply Chain Management

• Strategic sourcing for USMCA compliance
• Sequencing and kitting services
• Just-in-time delivery systems
• Inventory management

EV Transition Support

• Capabilities for electric vehicle components
• Experience with new electromobility technologies
• Flexibility to support traditional and electric platforms

Strategic Value Proposition

Cost Reduction

• Up to 50% savings on manufacturing operations
• Competitive Mexican labor rates with high quality
• Reduced overhead through shared facilities and expertise

Risk Mitigation

• USMCA expertise ensuring tariff-free access
• Shelter manufacturing services for easier market entry
• Compliance with all trade regulations and labor standards
• Binational capabilities reducing single-country risk

Speed to Market

• Established infrastructure and supplier networks
• Rapid scaling capabilities (95%+ capacity utilization experience)
• Seamless integration with North American supply chains

Quality Assurance

• ISO-certified processes
• OEM-approved quality systems
• Continuous improvement methodologies
• Experienced workforce

The Future of Automotive Manufacturing in Mexico

Mexico’s automotive industry stands at a transformational moment, with several key trends shaping its future:

Short-Term Outlook (2025-2026)

Production Growth

• Expected to maintain 5th global ranking
• Projected 2.7% growth in 2025
• Continued record-breaking production levels
• EV production: 250,000+ units by end of 2025

USMCA Review Impact

• July 2026 review will be critical
• Focus on EVs, critical minerals, semiconductors
• Potential for strengthened regional integration
• Labor standards and supply chain security

Tariff Resolution

• Need for clarity on U.S.-Mexico trade relationship
• USMCA exemptions likely to continue
• Importance of compliant manufacturing

Medium-Term Outlook (2027-2030)

Electromobility Dominance

• 50% EV sales target by 2030
• Massive EV production expansion
• Complete battery supply chain development
• Charging infrastructure buildout

Supply Chain Independence

• Reduced reliance on Chinese inputs
• North American critical minerals development
• Regional battery production capacity
• Semiconductor integration

Advanced Manufacturing

• AI and Industry 4.0 implementation
• Smart manufacturing expansion
• High-tech component production
• Software-defined vehicle capabilities

Long-Term Vision (2035+)

100% Electrification

• Full transition to electric and zero-emission vehicles
• Global EV manufacturing leader
• Sustainable transportation hub
• Carbon-neutral production

Regional Integration

• Deep North American automotive ecosystem
• Seamless three-country supply chains
• Shared innovation and R&D
• Coordinated workforce development

Conclusion

Mexico’s automotive industry has achieved unprecedented success in 2024-2025, solidifying its position as the world’s 5th largest vehicle producer with record-breaking production and exports. The rapid transition to electromobility, combined with the benefits of USMCA and strategic nearshoring trends, positions Mexico as an essential player in North American automotive manufacturing.

For companies seeking to optimize their manufacturing operations, reduce costs, and ensure USMCA-compliant access to North American markets, Mexico offers an unparalleled combination of:

• Skilled workforce and world-class infrastructure
• Cost competitiveness without sacrificing quality
• Strategic location and trade agreement access
• Established supply chains and industrial ecosystems
• Leadership in the EV transition
• Political and economic stability within USMCA framework

As the industry navigates the 2026 USMCA review, ongoing tariff discussions, and the accelerating EV transition, Mexico’s automotive sector continues to demonstrate resilience, innovation, and growth. The opportunities for manufacturers, suppliers, and investors have never been greater.

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Contact Prince Manufacturing today for a free consultation about your manufacturing goals. Our team of experts will work with you to develop tailored solutions that:

• Maximize cost savings (up to 50%)
• Ensure USMCA compliance
• Reduce risk through our shelter services
• Accelerate your time to market
• Position you for the EV future

Services We Provide

• Contract Manufacturing Solutions
• Metal Fabrication and Assembly
• Process Outsourcing
• Sequencing and Kitting
• Supply Chain Management
• Shelter Manufacturing in Mexico
• USMCA Compliance Consulting
• Nearshoring/Reshoring Support

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Last Updated: November 2025

Sources: INEGI, Mexican Association of the Automotive Industry (AMIA), International Organization of Motor Vehicle Manufacturers (OICA), U.S. International Trade Commission, Electro Movilidad Asociación (EMA), National Auto Parts Industry (INA), and various industry reports.