In the context of the North American Free Trade Agreement (USMCA) reconstructing the global automotive industry map, Mexico is becoming a strategic pivot for Chinese car companies to break through trade barriers and radiate the American market.
In 2023, the market share of Chinese automobile enterprises in Mexico has reached 10%, compared with 3% in 2021, realizing leapfrog growth, in which brands such as SAIC MG, Chery and JAC are particularly outstanding.Behind this achievement is the accurate grasp of the unique location advantages of Chinese car companies in Mexico — as a geographical hub connecting North America and Central America, Mexico not only enjoys the policy dividend of zero tariff on U.S. exports, but also radiates through the perfect highway and railroad network to Guatemala, Honduras and other Central American countries, forming a “foothold in North America, plowing deep into Latin America” strategy,The strategic layout of “based on North America and plowing deep into Latin America” has been formed.
First, the head of the car companies of the Mexican strategy
BYD: Breaker of the New Energy Circuit
As a global leader in new energy vehicles, BYD’s Mexican strategy is distinctly technology-driven. 2024, BYD announced a $1 billion investment in an electric vehicle plant near Monterrey, with a planned production capacity of 400,000 to 500,000 units, focusing on the production of the BYD SHARK, an electric pickup truck for the North American market.
With a starting price of around $35,000, this model is quickly opening up the Mexican premium market thanks to its 400-kilometer range and intelligent driver assistance systems.
In response to the USMCA’s stringent requirements on origin (75% of parts must be produced in North America), BYD has entered into a partnership with Gigacel, a local battery company in Mexico, to build a battery plant with an annual capacity of 10GWh in the state of Queretaro, which is expected to go into operation in 2026.
This two-wheel drive model of “vehicle + core components” has increased BYD’s localization rate in Mexico to 68%, paving the way for its entry into the U.S. market.
Chang’an Automobile: A Transformation Sample of a Traditional Giant
Chang’an Automobile’s Mexican layout reflects the robustness and innovation of a traditional automobile company. 2024, Chang’an signed an agreement with the government of the state of San Luis Potosí, investing $3 billion in the construction of a modernized automobile industrial park, with an annual production capacity of 500,000 vehicles to be realized in three phases.
The first phase of the project focuses on the production of fuel-efficient vehicles, with an emphasis on the launch of the CS55 PLUS, a compact SUV for the Mexican market, priced at approximately $22,000, which is 15 percent lower than Japanese vehicles in the same segment.
Meanwhile, Changan has established a new energy research and development center with the National Autonomous University of Mexico, and plans to launch locally produced pure electric models in 2026.
In terms of channel construction, Changan adopts the dual-track system of “dealer + e-commerce”, has set up 32 4S stores in Mexico City, Monterrey and other cities, and has access to the local e-commerce platform Mercado Libre, realizing the O2O mode of online ordering and offline delivery.
Chery Automobile: The Road to Rebound for the King of Price/Performance
Since entering the Mexican market with the Chirey brand in 2022, Chery has risen rapidly with its “high configuration, low price” strategy. 38,000 units were sold in 2023, with a market share of 2.8%, with the compact SUV Ruihu 7 becoming a breakout hit with a starting price of $18,000 USD.
To further consolidate its advantage, Chery plans to build a 400,000-unit-a-year plant in Guadalajara, focusing on fuel-efficient vehicles and plug-in hybrids, and plans to export to the U.S. through Mexico.
It is worth noting that Chery has reached a strategic cooperation with Gigante Motors, Mexico’s largest dealer group, which has invested $500 million to build a nationwide sales network that will enable Chery’s dealerships to exceed 100 by 2024.This deep bonding of “manufacturer + local giant” effectively solves the channel management problems common to multinational automakers.
SAIC: A Pathfinder for the Whole Industrial Chain Going Overseas
The success of SAIC MG in Mexico is attributed to its three-dimensional layout of “Product + Logistics + Finance”.
In 2023, MG held 45% of the Chinese carmaker’s market share in Mexico with 60,000 units sold, with the MG5 model being the segment champion with a price tag of RMB 126,000 yuan.
To support sales growth, SAIC has opened a self-operated Ningde-Mexico route, shortening the transportation cycle by 3 days and reducing logistics costs by 18%.In terms of localized production, SAIC has reached an agreement with the Mexican government to build an integrated automobile city in Monterrey, including an R&D center, which will produce fuel and electric vehicles and export them to Honduras, El Salvador and other countries through the Central American Common Market (CACM) in the future.It is worth mentioning that SAIC has launched the “Cross-border Pass” financial product in conjunction with China Credit Insurance Corporation (CICC), which provides Mexican dealers with low-interest loans and reduces the down payment ratio to 10%, significantly stimulating consumer demand.
Radiation effects of the Mexican hub
The strategic value of Mexico lies not only in the North American market, but also in its ability to radiate to Central America.Chinese car companies realize regional coverage through three modes:
Direct Export and KD Assembly
JAC’s plant in Mexico not only supplies the local market, but also exports KD (bulk assembly) kits to Guatemala, Nicaragua, and other countries via road transportation.
In 2024, JAC set up an assembly plant in Guatemala City, utilizing cheap local labor to complete the assembly of the entire vehicle, with a final selling price 22% lower than that of direct imports.This “Made in Mexico + Assembled in Central America” model not only avoids high tariffs in some countries, but also meets local demand for jobs.
Regional Trade Agreements Utilization
The free trade agreements signed between Mexico and five Central American countries (Guatemala, Honduras, El Salvador, Nicaragua, and Costa Rica) have allowed Chinese car companies to enter these markets with zero tariffs on their products.
For example, Chery’s SUV models produced through its Mexican plant, which are shipped overland to Guatemala and then re-exported to other Central American countries, saw sales in the region grow 47% year-on-year in 2024.
Localized Production Upgrade
SAIC MG plans to build a warehouse center in Panama’s Colón Free Trade Zone to radiate the Caribbean region.The center will not only undertake logistics functions, but also introduce modular production lines to quickly adjust model configurations according to local demand.
This “asset-light + agile manufacturing” model enables SAIC to cover markets in 15 countries in Central America at a lower cost.
Challenges and ways to break the ice
Despite the bright prospects, Chinese automakers still face multiple challenges in Mexico:
Supply chain localization pressure: USMCA requires 75% of parts to be produced in North America, while Mexico’s local supply chain is dominated by traditional fuel vehicles, and new energy core components rely heavily on imports.For this reason, Chinese battery companies such as Ningde Times and Yiwei Lithium Energy have laid out production bases in northern Mexico, and are expected to achieve a 50% localization rate of power batteries by 2026.
Labor and environmental standards.Mexico’s new labor law requires foreign companies to establish independent labor unions, leading to a 12% increase in labor costs.Chery has established training bases in cooperation with local vocational colleges to meet labor demand and reduce the risk of labor disputes.
Brand awareness short board.Mexican consumers still perceive Chinese brands as “low price, low quality”.BYD’s sponsorship of the Mexico City International Auto Show and signing an endorsement deal with soccer star Javier Hernandez will increase brand favorability by 27% by 2024
From manufacturing base to innovation center
Mexico is transforming itself from an “overseas factory” for Chinese automakers to a “regional innovation center”.
In 2025, BYD plans to set up an autonomous driving research and development center in Monterrey, joining hands with local colleges and universities to develop intelligent driving systems adapted to complex road conditions; and Chang’an Automobile is cooperating with the Mexican Ministry of Energy to explore the construction of solar charging networks, with the goal of realizing the full coverage of charging stations along Mexico’s major highways by 2030.
This two-wheel drive of “technology + infrastructure” will enable Chinese automakers to realize a qualitative leap in competitiveness in Mexico and the entire American market.
When BYD’s electric pickup truck rides on the Mexican plateau, when Chery’s SUV shuttles in the rainforest of Central America, China’s auto industry is using Mexico as a pivot point to pry the trillion-dollar market of the American continent.This journey to the sea, which began with manufacturing, will eventually be sublimated into an all-round output of technology, standards and ecology, and a Chinese program will be written in the wave of change in the global automobile industry.
Source: Sichuan Belt and Road Economic and Trade Cooperation Promotion Association
