BYD: China steps on the gas in the Mexican auto market: ‘The long-term goal is the US’ | Economy and Business

Vehicles manufactured in China are accelerating their pace in the Mexican market. According to official figures, 20% of the light vehicles sold last year in the Latin American country were imported from China, equivalent to 273,592 units, which also represents a growth of 50% compared to 2022. For now, The import of vehicles from China comes mainly from Western brands that have their manufacturing plants in that country. Thus, the cars are from General Motors, Ford, Chrysler, BMW and Renault. However, little by little the presence of specifically Chinese brands in Mexico has also been increasing. Among the names that landed in the last three years are: Changan, JMC, Chirey, Jaecoo, Jetour, among others.

Mexico is the seventh largest automobile producer in the world and 90% of its production is destined for export, mainly to the United States. According to industry data, in 2023 the country shipped 3.3 million units abroad, a growth of 15% compared to 2022. In addition, auto companies in the country assembled a total of 3.7 million vehicles on last year, 14% more compared to the previous year.

Guillermo Rosales, president of the Mexican Association of Automotive Distributors (AMDA), explains that precisely because 90% of Mexican production travels abroad, Mexico imports vehicles to supply the domestic market. According to their figures, 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 increased by 24.4% during 2023, with the marketing of 1.3 million vehicles. “We have a positive outlook in the domestic market, for this year we are calculating an increase of 7% compared to last year due to economic growth and the perspective of a drop in interest rates, we could even think of reaching 1.5 million units sold,” predicts Rosales.

Although for now the large Western brands continue to lead this commercial flow between Mexico and China, the interest of Chinese companies in landing in Mexico is increasing, not only as a seller, but now as shipowners as well. Chinese electric car maker BYD is looking for a site for a new plant in Mexico. The States of Nuevo León, Jalisco and Hidalgo have already raised their voices to offer some space for the largest Chinese electric car manufacturer to land in the national territory. According to Reuters, this new production center will seek to boost the company’s sales in the local market with an annual capacity of 150,000 cars.

BYD has been marketing cars in the country for less than 12 months. According to Bloomberg, Roberto Arechederra Pacheco, head of the Ministry of Economic Development (Sedeco) of the state government of Jalisco, indicated in an interview that the Chinese company sent a delegation of executives who met with state officials a few days ago. “The company did a very in-depth analysis of how many educational centers there are, population volumes close to the places where they could put their plant,” the state official told the agency.

José Zozaya, executive president of the Mexican Association of the Automotive Industry (AMIA), admits that in the sector it is already common to hear of the Chinese interest in building an assembly plant in Mexico. “We have not seen any investment from any company come to fruition, it is good that there is such appetite, hopefully it will translate into an investment that generates good jobs,” he says. The specialist in the sector points out that the inroads by Chinese brands into the Mexican market is part of a global trend due to the need for Asian producers to find new markets in the Middle East and Latin America.

The head of the AMIA recognizes that the inroads made by Chinese cars in Mexico has changed marketing dynamics with more direct competition in prices with respect to their Western counterparts. “They have affected the Mexican market, obviously through more attractive prices, very attractive models and designs and extended warranties; it is a way to buy and the market grows,” he says. 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 delays with its customers of months, as has happened in other parts of the world.

For the automobile sector businessman and former Secretary of Economy of Nuevo León, Fernando Turner, BYD and other Asian auto parts companies see Mexico as a thriving market that can be the spearhead in the Latin American market. He does not rule out the possibility that these Chinese movements are part of the strategy of triangulating trade flows to the United States via Mexico to avoid the restrictions imposed by Washington: “The objective may be the United States, but in the long term.” In any case, Turner warns that it will not be so easy for Chinese assembly companies to enter the U.S. market on a large scale because they have many protection measures for their national producers.

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