Since March 2025, the North American automotive industry has continued to operate relatively “normally,” albeit amidst uncertainty stemming from the imposition of tariffs by the United States—our primary customer. In 2024, Mexico reached a record production of 3.98 million vehicles. While the new tariffs on Mexican-made automobiles and auto parts suggested a potential drastic decline, final production in 2025 reached 3.55 million—just 33,000 units fewer than the previous year (a variation of less than 1%). This underscores the resilience of the North American automotive market, its deep level of integration, and the ongoing need to renew the vehicle fleet year after year.
Nevertheless, the impact of these tariffs is evident in the slowdown of new investments and the launch of new models. Production remains focused on the same vehicles manufactured over the last five years, with only a few exceptions—such as electric and hybrid models—which currently have a limited impact on the North American market. The United States continues to favor traditional pickup trucks and other vehicles powered by internal combustion engines, while the adoption of electric vehicles remains concentrated in a few major cities, accounting for a small market share.
Beyond demand trends, major manufacturers have held back significant investments due to tariff-related uncertainty. They are waiting for the governments of the three nations to define the new “rules of the game” for the automotive industry under the USMCA framework. For the time being, there is no sign that these tariffs will be lifted; instead, they continue to be used as a bargaining chip to advance other US government objectives. Meanwhile, a stagnation in the technological development of the North American automotive industry is evident—a phenomenon that is “not as noticeable” due to the fact that the total production volume across the three countries remains stable.
While our region continues to produce internal combustion engine pickup trucks and SUVs, the global automotive industry has evolved and reached a new level. China is leading technological development, driven by a broad range of vehicles featuring new powertrain technologies and advanced software integration across various models. In 2025, electric and plug-in hybrid vehicles accounted for 50% of vehicle sales in China, totaling 13.9 million units. It is projected that by 2026, internal combustion engine vehicles will represent less than half of total sales. Furthermore, Chinese consumers are increasingly favoring local brands over the traditional international brands that had dominated the market until now. Attracted by appealing designs, a constant stream of new model launches, and high-end technology, Chinese consumers are opting for domestically produced vehicles.
Europe has already begun the transition toward this new paradigm. Chinese brands such as Geely, Chery, SAIC, and BYD have established production facilities, acquired European firms, or formed joint ventures. They have even reactivated dormant plants—such as the former Nissan factory in Barcelona, now operated by Chery to produce OMODA vehicles. Meanwhile, battery manufacturers like CATL have made significant investments, including a mega-factory in Hungary to supply various European automakers. In parallel, Tier 1 suppliers have forged strategic alliances with Chinese companies: Germany’s Bosch is collaborating with Huawei and Changan (through its electric vehicle division, Avatr) to develop autonomous driving systems and digital architectures; Continental has formed a joint venture with Horizon Robotics (specializing in AI chips) to create hardware and software for autonomous driving; and firms such as Forvia, Faurecia, Magna, and ZF are jointly developing technology with Chinese manufacturers—serving both emerging brands and traditional automakers. Given this global context of technological realignment, should Mexico remain on the sidelines, or should it seek avenues for collaboration with the Chinese automotive industry? This dilemma is complex, especially since our primary trading partner has categorically stated that it will not allow Chinese vehicles into its market. Nevertheless, maintaining Mexico’s current stance carries the risk of losing technological competitiveness relative to the rest of the world.
In light of this, two main alternatives emerge: On one hand, if North America agrees to restrict Chinese investment, it will be essential to accelerate the region’s own technological development and collaborate on creating next-generation vehicles, moving beyond a focus on traditional combustion-engine models. On the other hand, Mexico could choose to welcome investment from Chinese automakers to supply the domestic market and regions outside of North America, leveraging its network of free trade agreements with Latin America and other nations. This latter approach should be contingent upon the integration of domestically produced auto parts and the strengthening of the local supply chain for new technologies—though it remains to be seen whether Chinese manufacturers would be interested in establishing operations in Mexico without direct access to the US market.
The future of the Mexican automotive industry will not be defined by inertia, but by the strategic decisions we make today. Remaining on the sidelines while the global technological landscape is being reshaped is not a viable option; the true risk for Mexico lies in passivity. In this regard, efforts to develop electric vehicles using Mexican technology—such as the Olinia project—demonstrate that the necessary technical capacity exists, even if such initiatives represent only a modest undertaking on the global stage.
We must unite as an industry to forge a coherent vision and amplify our national impact within the global arena.
At CLAUT, we will continue to drive innovation, strengthen the local supply chain, and actively integrate our companies into the future of mobility.
Source: mexicobusiness.news
