BYD, Geely Eye Nissan–Mercedes Plant in Mexico

Chinese automakers BYD and Geely are among the finalists seeking to acquire the Nissan–Mercedes-Benz assembly plant in Aguascalientes, Mexico, according to a person familiar with the matter. The potential purchase would allow them to expand manufacturing in a country where US tariffs have contributed to factory closures and job losses. Vietnam’s VinFast is also among the three remaining bidders. At least two other Chinese manufacturers — Chery and Great Wall Motor — were part of the initial group of nine interested companies, sources said.

The possible sale represents a shift for Mexico’s automotive sector, long dominated by US, European and Japanese automakers producing primarily for export to the United States. Interest from Chinese manufacturers in the facility has not previously been reported.

Mexico’s federal government cannot formally block the transaction. However, two government sources said officials from the Economy Ministry have privately encouraged state authorities to delay Chinese investments until trade negotiations with the United States are completed. Mexico is preparing for talks related to the USMCA trade agreement amid rising trade tensions.

The White House has framed US trade measures as driven by national and economic security concerns. “The issue here is subsidized Chinese overcapacity pushing Chinese firms to dump excess production into other markets,” a White House spokesperson said. The United States has effectively restricted sales of Chinese-brand vehicles, and President Donald Trump has accused Mexico of serving as a “back door” for Chinese goods entering the US market.

The Aguascalientes plant, which opened in 2017, has an annual production capacity of 230,000 vehicles and includes an established workforce and logistics infrastructure. The facility is being closed following strategic decisions by its current operators. Mercedes-Benz, which produces the GLB at the site, is relocating production to Hungary. The company said only that production of the current-generation GLB is ending and did not specify whether tariffs influenced the move. Nissan, which assembled the Infiniti QX50 and QX55 at the plant, is discontinuing those models as part of what it described as “broader strategic shifts.” The Japanese automaker is also shutting down a second plant near Mexico City under a global restructuring plan.

Industry sources said US tariffs were a decisive factor in the closure. Since March 2024, vehicles manufactured in Mexico have faced a 25% US tariff. In January, Trump said at a Ford factory, “We do not need cars made in Mexico,” arguing that tariffs would stimulate domestic production. However, US federal data show a loss of 17,000 auto-sector jobs since January 2025. The White House has said that new manufacturing facilities take time to build.

Mexico’s automotive sector is heavily dependent on the US market. In 2024, 2.8 million of the 4 million passenger vehicles produced in Mexico were sold in the United States, according to the Mexican Automotive Industry Association (AMIA). After three decades of expansion, vehicle exports to the United States declined nearly 3% in 2025, AMIA reported.

“We cannot continue like this. Right now, it is cheaper to send cars to the United States from Europe and Asia than it is from Mexico,” said Rogelio Garza, president, AMIA.

Government data show Mexico lost about 60,000 auto-industry jobs last year.

Meanwhile, Chinese automakers continue expanding globally. BYD’s sales have increased tenfold since 2020, while Geely’s have doubled over the same period. Both companies sold more than 4 million vehicles last year, roughly comparable to Ford’s annual volume. Consultancy AutoForecast Solutions estimates that Chinese brands increased their share of Mexico’s vehicle market from zero in 2020 to about 10% in 2025. Mexico records roughly 1.5 million vehicle sales annually.

Mexico imposed 50% tariffs on vehicles imported from China and certain other Asian countries, a move widely interpreted as an effort to ease tensions with Washington. However, those duties also create incentives for Chinese automakers to establish local production rather than export finished vehicles into the country.

Chinese investment is already expanding in Mexico’s automotive supply chain. In Ramos Arizpe, Shanghai Yongmaotai Automotive Technology is building an auto-parts plant expected to employ 600 workers. The investment comes as General Motors lays off 1,900 employees at its electric-vehicle plant in the same city, citing weak US demand. US EV sales have slowed following subsidy rollbacks by the Trump administration.

The government of Aguascalientes said the nine companies that initially expressed interest in the Nissan–Mercedes plant are primarily hybrid and electric vehicle manufacturers targeting Mexico and Latin America, though it did not identify them.

Chinese automakers must obtain approval from Beijing for overseas manufacturing investments. A source familiar with the proposals said China’s Ministry of Commerce is aware of the interest in the Aguascalientes plant and has not raised objections.

BYD had previously explored building a new factory in Mexico but became frustrated with the regulatory approval process, according to a government official familiar with the discussions. Acquiring the existing Aguascalientes facility would not require the same level of authorization as constructing a new plant.

“Politics aside,” said Víctor González, a business consultant who has advised Mexican states on attracting Chinese investment, “there is not a single state in Mexico that would not be open to and supportive of Chinese automakers investing, manufacturing and hiring locally.”