Problem with Chinese cars in Mexico: The perspective of our CEO

Claudia Shiyanbam’s work as the leader of Mexico is becoming increasingly difficult.

I have written and talked about About the many challenges he faces, From the dull economy in Mexico to an aggressive President Trump, he has many significant and complex results on trade, infrastructure, health care, judicial reform, cortells, education and other policy issues with the United States

One of the most complex choices he faces is Chinese cars and Chinese investment in Mexico. I explain.

Since the signing of Nofta 30 years ago, Mexico has increased its vehicle production and became one of the world’s largest automobiles. By 2024, Mexico produced nearly 4 million vehicles – a record for the country and an increase of 5.5% from 2023. About 88% of Mexico’s production is exported, more than 80% goes to the United States.

The country has created more than $ 120 billion auto parts manufacturing, exporting 87%. As a result of this growth, Mexico is placed in automobiles worldwide and the fourth place in the world.

Very good so far, right? But things are quickly more complicated. I sat down to help me understand what’s going on worldwide, not just in the Mexican Auto market Michael Tanne of Tanne Inzitz. Tanne has worked for over 30 years in the global auto market, and is one of the best people to speak worldwide when understanding the tendencies and future predictions of industry.

Here are some important trips from our conversation.

1. Last year Mexico’s domestic car industry sales were about 1.5 million vehicles, which increased by almost 10%. Surprisingly, only 34% of the cars sold in the country last year were domestic produced and 66% imported. Think about it for a moment. Mexico exports 88% of its own car production, but imports 66% of its domestic car sales! One-third of the imports came from China, ie Chinese-man-made vehicles were about 20% of the domestic car market last year-a few years ago.

2. Although Mexico exports 88% of its own vehicle production, the country is now an importer of Chinese -made cars, which recently overtake Russia. This is a significant milestone: Russia is geographically close to China, no longer much in its own automotive industry, and geopolitical is politically close to China. Mexico, on the other hand, is far from China, has its own massive vehicle industry, and geopolitical is closely close to the United States… and now it imports more Chinese cars than any other country?

3: “From China” does not always mean “Chinese”. Although he imports various Chinese brands such as the Mexico BYD, JAC and GAC, in fact, general Motors cars made in China are the largest percentage of imports in Mexico. So despite four plants in the GM country, most of its production are exported. China has a significant higher capacity like GM, searching for other markets to export its Chinese -made vehicles, and Mexico has become an preferred export market for its cars.

4. Many Chinese vehicle companies are interested in building plants in Mexico, The market-pre-PIT teases the notification for more than a year now. No major announcement has not yet been confirmed, but the rate of construction of Chinese vehicle dealerships across the country has not shown the sign of the recession. Even a new PIT dealership in the Chan Miguel de Alende where I live is even going up quickly. It is difficult to imagine a significant announcement of a new plant in the current trade environment from the beginning of the second Trump administration.

5. Chinese -made cars have seen great improvement in quality, novelty and prices over the past several years. According to Tonne, the average new Chinese car exports have been priced at US $ 19,000, compared to a new US car with $ 48,000. China is leading the world so far in the production of electric car (and battery). Contrary to nearly, about 80% of the imports imported from China to Mexico (from high -capacity plants due to limited demand for petrol -powered cars).

6. The original plan for what is going to happen in 2026 is not a “re -negotiation”, but rather a renewal – but before the official renewal process begins with threats before the Trump contract begins. Trump has threatened the fees on Mexico (clearly violated the contract), and then acting on this threat and then removing them, then removing them, and then threatening to re -threaten in Mexico for non -commercial reasons. He has also pressed automobile companies around the world to increase investment in the United States, and they have told them not to expect autos to the United States from any other country (including Mexico). In fact, rumors have come up (the company then refused) That Honda wanted to move products from Mexico to the United States

7. Whatever happens in the USMCA renewal, it is difficult to imagine any vehicle companies to announce significant new investments at any time in Mexico. This seems to be a foreign direct investment in most automobile industry, which historically indicates 15% to 20% The country’s total foreign direct investment, Going frozen. This means that a significant driver of the growth of Mexico’s GDP will be stopped for some time.

So where does it leave us? Most of the Mexican vehicle production is exported to the United States, and Trump is constantly threatening to put fees for those products soon or later. Most of the domestic vehicle sales in Mexico are imported, Chinese -made cars are one -third of the import and the largest importer of public motors.

President Sheinbam has many options. A significant bargaining chip between the US and Canada for the update of the USMCA can stop any new Chinese auto foreign direct investment within Mexico. As far as we have seen so far, that is not enough.

So, if any and all Chinese -made imports are GM cars, do you want to prevent the coming to the country? It will be very favorable in the USMCA debates, but it will refuse access to the low -cost, high -quality and increasingly increasingly electric Chinese -made cars. Considering Trump’s desire to place fees for all the cars that are not done in the United States (including those made in Mexico), you can avoid fees on Mexican-made cars by stopping all Chinese imports-but is this really a great situation for Mexico? Talk about a puzzle.

Tanne thinks that Mexico can provide a quota to control the percentage of domestic car sales allowed to come to China’s fees to satisfy the USMCA negotiations. Anything above that quota can be subjected to higher fees. This approach allows Mexican negotiators to hold a tight space for avoiding fees from the United States, while allowing a certain number of Chinese cars into the country.

These types of policy changes may help Mexico to keep its own in terms of current production, but it is not clear to the future growth and foreign direct investment in Mexico’s automotive industry. Adding threatening robotics and rapid improvement of artificial intelligence on the factory site, the automotive industry will no longer be an employment in the future, and may actually require less labor. Tanne says that he has never seen anything like what is going on in the vehicle industry today; The situation is more powerful, faster, uncertain and unpredictable than any other time in his career life.

Maybe President Shinbam’s plan must be Domestic -made Mexican Electric Car is called “Ollenia” Above all is not such a crazy idea.

What do you think Claudia should do? Let us know in the comments!

Travis Pembenk Chief executive Mexico News Daily ANT has been living in Mexico for almost 30 years, working or playing.