How Will Adjustments in U.S.-Mexico Tariff Policies Affect the Outlook for Chinese New Energy Buses Overseas? | Going Global: Automobiles (AI Translation)

美墨关税政策调整在即 中国新能源客车出海预期如何？｜出海·汽车

[para. 1] The temporary exemption from a 25% U.S. tariff on Mexican imports, including vehicles, is set to expire on April 2, 2025, creating uncertainty for Chinese new energy vehicle companies interested in the Mexican market. One such company, Yutong Bus, a major supplier of new energy buses in Mexico, plans to deepen local production and increase the use of local components to mitigate costs. An automotive industry analyst suggested that Chinese firms might prioritize the local Latin American market over North America due to these uncertainties.

[para. 2] Mexico was previously seen as a "springboard" for Chinese automakers to enter North America through trade agreements like NAFTA and USMCA. In 2024, the U.S. imported $471 billion in automotive goods, with Mexico contributing the largest share of $49 billion. However, a 25% U.S. tariff imposed in March covers almost all goods from Mexico and Canada, leading to strategic recalibrations for Chinese companies that previously used Mexico as a re-export hub. Yutong Bus acknowledged increased costs due to tariffs, suggesting a shift in focus to the Mexican domestic market.

[para. 3] Chinese automakers had limited market penetration in North American new energy vehicle markets dominated by companies like Tesla, partly due to the new tariffs. Analysts indicated that China’s current bus export strategy involves complete vehicles and chassis rather than building overseas factories. U.S. tariffs could impact China's bus exports, although Chinese manufacturers retain competitiveness in cost and delivery timeframes. The United States might face imported inflation as a result of these tariffs.

[para. 4] Discussions about Mexico imposing reciprocal tariffs on China have surfaced, although no decisions have been announced. Mexico's position in Chinese car exports shifted in recent years; it fell to the second position after being overtaken by Russia. Still, in the first three quarters of 2024, Mexico accounted for 7.5% of China’s total car export volume. The demand for buses in developed regions is saturated, whereas Latin America is witnessing growth, particularly for replacing older vehicles. This positions Chinese manufacturers well to potentially fill the demand for new energy buses in Mexico.

[para. 5] Urbanization and the need for enhanced public transportation boost Mexico's demand for buses. Mérida, a major city, plans to update its bus fleet; Chinese companies like Yutong, BYD, and King Long are already entering this market. In November 2024, Yutong will deliver hybrid buses to the city. Latin American countries such as Mexico, Chile, and Colombia have a growing demand for new energy buses, which Chinese manufacturers supply due to cost-effective offerings.

[para. 6] The electric bus market in Mexico, expected to grow significantly from $280 million in 2024 to $1.09 billion by 2029, sees participation from major companies like Daimler, BYD, and Yutong. Yutong exported 14,000 buses globally in 2024, growing its Mexican market share significantly, particularly in Mexico City where it dominates the trolleybus segment.

[para. 7] Centralized procurement by governments shapes the entry of new energy buses into Latin America. Tariff policies might narrow the price advantage for Chinese buses, potentially shifting Mexico's preferences to European or American firms. Nonetheless, cost remains a key factor for Mexican procurement decisions, and geopolitical tensions have minimal influence on such transactions. Therefore, the outlook remains positive for Chinese bus exports to Latin America.

The article highlights strategic adaptations and the evolving dynamics of Chinese new energy vehicle manufacturers navigating tariffs and market shifts in North America and Latin America, emphasizing the potential for growth and the challenges faced in this sector.