MEXICO CITY – Mexico’s automotive industry is hopeful about production and exports in 2026, including through trade with the U.S., despite the trade policy uncertainty that shook the industry last year.
The uncertainty halted investments, Francisco González, executive president of INA, the National Auto Parts Industry Association in Mexico, explained to WardsAuto. He said Mexican auto parts production generated $110.03 billion sales during January-November 2025, down 2.6% year-on-year.
“The first half of the year [2025] we saw production and exports falling due to the trade environment caused by the U.S. administration,” he told WardsAuto in Spanish. “During the second half we saw numbers stabilizing, with a rise in exports and production. We finished 2025 with a small decrease but we hope to resume growth during the first half of 2026.”
Data from the International Trade Administration, part of the U.S. Department of Commerce, shows that Mexico is ranked as the fourth largest global spare parts producer and exporter worldwide, accounting for 52.2% of auto parts imported by the U.S.
INA numbers stressed this segment’s export dependence — Mexico-made auto parts sales during 2024 were $121.3 billion while exports were $106 billion, with new INA data saying 86.9% of these exports USA-bound in January-November 2025, and just 3.2% going to Canada.
Mexico’s finished auto sector is similarly export-dependent. In 2024 Mexico was the world’s fifth largest light vehicle exporter, with $104.8 billion of overseas sales in 2024, with 79.7% of export receipts in the U.S., with another combined 12% in the next two largest markets — Canada and Germany — according to the ITA.
Weaknesses in these sales made Mexico’s vehicle production fall 1.46% year-on-year from January and November 2025, to 3.71 million units, according to INEGI, Mexico’s National Institute of Statistics and Geography, with exports falling 1.6% to 3.16 million vehicles, albeit with domestic sales rising 0.96% to 1.37 million units.
Trade uncertainty affects investments
Continued uncertainty over tariffs and the future of the U.S.-Mexico-Canada Agreement, under review this year, could also stunt new investments, said Thomas Karig, an automotive sector consultant based in Puebla, Mexico, and a former corporate relations and compliance officer VP at Volkswagen.
“Manufacturers have been postponing new investment decisions,” he told WardsAuto in Spanish. If that trend is not reversed "it will have a medium-term impact when current car models that are used in Mexico stop being attractive to the market and have to be replaced. If that isn’t done, production in Mexico could fall.”
“This year market growth will be conditioned by the USMCA review,” said Guillermo Rosales, spokesperson and executive president at AMDA, the Mexican Association of Automobile Distributors, in Spanish. “The uncertainty that has prevailed and that is affecting the economy and the investment must lift, as investments are not being made and employment numbers aren’t growing. The economy remains stalled and that creates a limited context in light vehicle sales.”
Karig noted that the presence of China-based manufacturers’ in Mexico was likely to be a topic of discussion in the USMCA review. An updated deal could limit the amount of Chinese-origin content in Mexican products, including for imported parts — “a situation that could limit investment of Chinese companies in Mexico,” he said.
Some China-based manufacturers are already growing nervous about their investments in Mexico: BYD in July 2025 cancelled a plan to build a manufacturing plant near Guadalajara, Jalisco. BYD’s corporate vice president Julián Villarroel said in November that the decision was under review, but tariff uncertainty delayed decisions.
AMDA’s Rosales added that concerns about weak domestic demand for autos had also deterred investments from China-based companies, noting that China’s SEV (a Mexico EV brand sourcing models in China) and Neta (an EV start-up based in China) had shelved investment plans.
“Some distributors have closed, mostly belonging to Chinese brands that arrived in Mexico with higher [sales] projections than what has really been seen,” Rosales said. “The size of the network, meaning the number of distributors, is adjusting.
Mexico’s government will strike USMCA deal
According to Karig, progress has been made on a project to build an electric car assembly plant in Puebla state, making a 100% made-and-sourced in Mexico affordable EV, sold under a ‘Olinia’ brand.
"We know the Olinia project is moving forward, and if successful, it could make a significant contribution to mobility,” he said, although major announcements are awaited.
Meanwhile, Mexico’s auto sector continues to monitor U.S. trade instability, such as February 20’s U.S. Supreme Court decision preventing President Donald Trump’s use of the International Emergency Economic Powers Act to impose tariffs without Congressional approval. Karig does not believe this will impact the Section 232 tariffs already imposed on non-USMCA-complaint Mexico auto exports, however.
According to the INA, 92% of the auto parts produced in Mexico today comply with USMCA rules of origin and are hence tariff-free, while the remainder attracts approximately 27% duty.
Rosales expressed that once the agreement review officially occurs in July, “It will surely be a complicated process due to the demands of the U.S. government to implement more protection and promote U.S.-manufactured content within the automotive industry.”
But he predicts a deal will be struck: “The integration that exists between the U.S., Canadian, and Mexican industries will prevail and will lead to an agreement.”
