To expand their brand's overseas operations, three Chinese automakers, BYD, SAIC MG, and Chery, are all planning to establish complete vehicle manufacturing plants in Mexico. Mexico is a stronghold in the North American automotive market and ranks as the world's seventh-largest automobile producer and fifth-largest producer of automobile components, boasting abundant metal ore resources and skilled labor. According to statistics, Mexico is the second-largest export destination for Chinese automobiles after Russia, with total vehicle exports reaching 334,000 units.
BYD officially entered the Mexican passenger car market in March 2023 and subsequently introduced models such as the Dolphin and Sea Lion. Li Ke, Executive Vice President of BYD, stated that the company is considering building a new factory in Mexico. "In principle, the cars we offer in Mexico will come from China, but if demand increases significantly in the future, we will consider manufacturing in Mexico," he said.
Similarly, SAIC MG inaugurated an international self-operated route from Ningde to Mexico in March 2023. The largest car-carrying roll-on/roll-off vessel under its umbrella, the "Anji Phoenix," carried the first batch of a thousand new MG brand cars to their destination. The following month, SAIC MG expressed its consideration of constructing a new factory in Mexico and plans to enter the U.S. market.
Chery also intends to build a car factory in Mexico with an annual capacity of 400,000 vehicles, primarily targeting other international markets. Overseas markets are an important growth area for Chery's automobile sales. In recent years, delivery volumes have increased annually, with exports accounting for more than half of total sales, second only to SAIC Group in export volume, ranking second.
Although Mexico is a vital component of the North American automotive market and companies establishing factories there can enjoy certain tariff benefits for parts purchased in the United States, Canada, and Mexico, as stipulated in the USMCA agreement, the prospects of Chinese automakers entering the U.S. market have been overshadowed by the announcement of the "Inflation Reduction Act" by the United States. The uncertainties in the U.S. market have hindered their entry. In the eyes of Chinese automakers intending to expand overseas, focusing on the more operationally feasible and highly potential market in Mexico may be a more viable option than waiting out the uncertain situation in the United States.
