BYD: China is pressing the accelerator in the Mexican automotive market: “The long-term objective is the United States”

Vehicles made in China are gaining momentum in the Mexican market. Shipowners based in the Chinese region have found an attractive market in Mexico to land on. According to official data, 20% of light vehicles sold in the Latin American country last year were imported from China, equivalent to 273,592 units, representing an increase of 50% compared to 2022. For now, vehicle imports from China mainly come from Western brands that have manufacturing plants in that country. Thus, the cars were sent…

Vehicles made in China are gaining momentum in the Mexican market. Shipowners based in the Chinese region have found an attractive market in Mexico to land on. According to official data, 20% of light vehicles sold in the Latin American country last year were imported from China, equivalent to 273,592 units, representing an increase of 50% compared to 2022. For now, vehicle imports from China mainly come from Western brands that have manufacturing plants in that country. Thus, the cars shipped are from General Motors, Ford, Chrysler, BMW or Renault. However, the presence of Chinese brands in particular is also gradually increasing in Mexico. Among the names that have emerged in the last three years are: Changan, JMC, Chire, Jacu, Jetour, and others.

Mexico is the world’s seventh-largest automobile producer and 90% of its production is for export, primarily to the United States. According to sector data, in 2023, the country shipped 3.3 million units abroad, an increase of 15% compared to 2022. Additionally, automotive companies in the country assembled a total of 3.7 million vehicles last year, a 14% increase over the previous year. last year.

Guillermo Rosales, president of the Mexican Association of Automotive Distributors (AMDA), explains that precisely because 90% of Mexican production goes abroad, Mexico imports vehicles to supply the imported market. According to their data, of the total number of vehicles sold in Mexico, 66% are imported models and the rest are assembled in the country. Car sales in Latin America’s second-largest economy are expected to grow 24.4% through 2023, with 1.3 million vehicles marketed. “Our outlook in the domestic market is positive, this year we are counting on a growth of 7% compared to last year due to the perspective of economic growth and falling interest rates, we are also about to reach sales of 1.5 million units. Can think,” Rosales predicts.

Although right now the big Western brands are leading this commercial flow between Mexico and China, Chinese companies are increasingly interested in landing in Mexico, not only as a seller, but now also as a shipowner. Chinese electric car maker BYD is looking for a site for a new plant in Mexico. The states of Nuevo Leon, Jalisco and Hidalgo have already raised their voices to give the biggest Chinese electric car maker some space to land in the national territory. According to Reuters, this new production center with an annual capacity of 150,000 cars will boost the company’s sales in the local market.

BYD has been marketing cars in the country for less than 12 months. According to Bloomberg, Roberto Arenchedera Pacheco, head of the Jalisco government’s Ministry of Economic Development (CEDCO), indicated in an interview that the Chinese company had sent a delegation of executives who met with state officials a few days earlier. “The company did a very thorough analysis of how many educational centers there are, how much population there is near those places where they can set up their plants,” the state official told the agency.

José Zozaya, executive president of the Mexican Association of the Automotive Industry (AMIA), admits that it is already common in the sector to hear about the interest of Chinese lovers in building assembly plants in Mexico. He says, “We have not seen any company’s investment succeed, it is good that there is so much appetite, hopefully this will now translate into investment that will create good jobs.” That infiltration of Chinese gear into the Mexican market is part of a global trend caused by the need for Asian producers to find new markets in the Middle East and Latin America.

The head of AMIA believes that the infiltration of Chinese cars into Mexico has changed the marketing dynamics with more direct competition in prices in relation to their Western counterparts. He noted, “They have influenced the Mexican market, obviously in more attractive prices, very attractive models and designs and extended warranties, it is a way to buy and the market grows.” Zozaya recognizes that in this outpost of Chinese cars in the Mexican market, the auto parts supply chain still needs to be refined to avoid months of delays with its customers, as has happened in other parts of the world.

For Fernando Turner, an automotive sector businessman and former Economy Secretary of Nuevo Leon, the interest from BYD and other Asian auto parts companies reflects Mexico’s view as a thriving market that could be a leader in the Latin American market. He does not reject the thesis that Chinese movements are part of a strategy to triangulate trade flows to the United States through Mexico to avoid sanctions imposed by Washington: “The objective may be the United States, but in the long term In.” In any case, Turner warns that it will not be so easy for Chinese assembly companies to enter the US market on a large scale because they have many safeguards in place for their national producers.

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