China Becomes Second-Largest Investor in Mexico's Auto Sector

China has emerged as a major investor in Mexico's automotive industry, contributing US$2.2 billion in the first half of 2024, according to the latest report from Directorio Automotriz. This investment, which supports over 20 projects, represents 18.3% of the total sector investment, making China the second-largest investor, just behind Germany, which accounts for 19.3%.

This investment represents a 52.7% increase in Chinese investments compared to the same period in 2023. Ricardo Vivero, CEO, Cluster Industrial and Directorio Automotriz, noted that Chinese firms are primarily seeking partnerships with Mexican businesses, transferring processes and technologies, and looking for skilled labor and service providers.

The report also breaks down investments by company type. Tier 1 and Tier 2 auto parts manufacturers accounted for 64.6% of total investments. Suppliers of products and services for the sector followed with 9.1%, while Original Equipment Manufacturers (OEMs) represented 8.1%. Industrial parks and raw materials companies each accounted for 6.4%, and development and engineering centers received 3.6%.

Investments related to electromobility platforms accounted for 36.4% of total investments in the first half of the year, amounting to US$4.69 billion across 40 projects. This is a slight decrease from the 43% recorded in 2023. The Volkswagen Group, including Audi Mexico, led these investments with significant projects aimed at adapting their Puebla plants for electric vehicle production.

These investments have also impacted employment and infrastructure. Over 34,000 jobs were created, though this represents a 48.33% decrease compared to the previous year. Infrastructure developments included the construction or renovation of more than 6.13 million square meters, a reduction of 38.8% from the first half of 2023. This decline is partly attributed to a slowing electric vehicle market and uncertainties surrounding the US elections, which have led companies like Tesla to temporarily pause their investments in Mexico.

Investment by State

Coahuila, Puebla, and Nuevo Leon attracted the highest amounts of investment in the first half of 2024. The top five states receiving the most investment were:

• Coahuila: US$2.23 billion

• Puebla: US$2.02 billion

• Nuevo Leon: US$883.6 million

• San Luis Potoso: US$587 million

• Guanajuato: US$483.3 million

Durango also saw significant investment, with a 5.7% share of the national total, including the establishment of its first OEM, SEV Motors Mexico, and the expansion of Tier 1 supplier Siete Leguas Automotive.