Chinese Carmakers Should Set Up Factories in Mexico, Executive Says

00:00

00:00/00:00

Listen to this article 1x

A JAC Motors dealership in the Coyoacan neighborhood of Mexico City on Nov. 20. Photo: VCG

Chinese automakers should transition from merely exporting vehicles to Mexico to investing in local production, which can help them better leverage the country’s regional market access while navigating geopolitical risks, a Chinese car executive said.

Mexico offers a route into North America and access to growing Latin American markets for Chinese automakers, who are increasingly looking to expand overseas. These firms should bring their expertise and supply chain capabilities to Mexico, acquire local component-manufacturing assets, and localize production, said Yu Yang, general manager of the international business division of Anhui Jianghuai Automobile Group Corp. Ltd. (JAC Motors) (600418.SH).

You've accessed an article available only to subscribers

Subscribe today for just $.99.

VIEW OPTIONS

Unlock exclusive discounts with a Caixin group subscription — ideal for teams and organizations.

Subscribe to both Caixin Global and The Wall Street Journal — for the price of one.

Share this article

Open WeChat and scan the QR code

DIGEST HUB

Digest Hub

Back

Explore the story in 30 seconds

Chinese automakers, like JAC Motors, plan to invest in local production in Mexico to leverage the regional market and navigate geopolitical risks.
Mexico, manufacturing 3.5 million vehicles annually, is a key market for Chinese automakers with 30% market share and serves as a gateway to North America and Latin America.
Growing U.S. protectionism poses challenges as many Chinese vehicles exported to Mexico are re-exported to the U.S. and Canada; however, Mexico's free trade agreements offer expansion opportunities into South America.

AI generated, for reference only

Who’s Who

Anhui Jianghuai Automobile Group Corp. Ltd. (JAC Motors): Anhui Jianghuai Automobile Group Corp. Ltd. (JAC Motors), based in Anhui province, plans to shift its strategy in Mexico from exporting to investing in local production. The company intends to start by exporting parts for local assembly and eventually build a manufacturing base. JAC Motors began exporting to Mexico in 2012 and started local assembly in 2017, and is one of the top-selling Chinese brands in the Mexican market.

SAIC Motor Corp. Ltd.: SAIC Motor Corp. Ltd. began exporting vehicles to Mexico in 2020 and has become one of the best-selling Chinese automakers in the country. Its MG brand entered the top 10 in local sales in 2023, selling more than 60,000 vehicles, primarily fossil-fuel vehicles. This success reflects the firm's significant presence in the Mexican auto market.

Chery Automobile Co. Ltd.: Chery Automobile Co. Ltd. began exporting vehicles to Mexico in 2022. Along with JAC Motors and SAIC Motor Corp. Ltd., Chery is among the best-selling Chinese automotive brands in the Mexican market. Currently, these companies mainly sell fossil-fuel vehicles in Mexico.

BYD Co. Ltd.: BYD Co. Ltd., a major electric vehicle manufacturer, began selling EVs in Mexico in the first quarter of 2023. They plan to establish a production base in the country, contributing to their strategic expansion in the region and capitalizing on Mexico's market and trade agreements.

Founder Securities Co. Ltd.: Founder Securities Co. Ltd. is a financial institution that provided data on Chinese automakers' exports to Mexico in 2023. They reported that 415,000 vehicles were exported, with only 134,000 sold locally and the remaining re-exported mainly to the U.S. and Canada.

Deloitte China: At the Guangzhou forum, Xu Sitao, the chief economist of Deloitte China, warned about geopolitical risks that Chinese companies could face due to Mexico's heavy reliance on the North American market and potential new tariffs on car imports suggested by U.S. President-Elect Donald Trump.

AI generated, for reference only

What Happened When