Chinese Manufacturers Support the Mexican Automotive Sector
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Chinese Manufacturers Support the Mexican Automotive Sector

Photo by:   Julian Hochgesang
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Paloma Duran By Paloma Duran | Journalist and Industry Analyst - Thu, 05/18/2023 - 10:00

While automakers have been struggling with backlogs in recent years, Chinese manufacturers seem to have filled the gap and stabilized prices. Kia Motors will expand its facilities in Nuevo Leon to launch its new EV9 electric car in the Mexican market. In addition, BMW expands its solar capacity in Mexico, doubling on-site generation as part of its renewable energy goals.

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Auto Prices Have Stabilized Thanks to Chinese Producers

The average cost of a new car in Mexico is MX$464,000 (US$26,449), up from MX$310,000(US$17,670) prior to the COVID-19 pandemic, according to J.D. Power consultancy. With used cars, the price rose between 14% and 30% in 2022, reaching a price very similar to that of a new car. In this scenario, Chinese manufacturers have entered the market and have managed to meet the demand for new cars, while stabilizing used car prices.

Kia Motors Will Produce New Electric Car in Nuevo Leon

Samuel García, Governor of Nuevo Leon, announced on May 15, 2023, that he had negotiated the expansion of the Kia Motors facility located in the municipality of Pesqueria. This expansion will allow the Korean company to produce its new EV9 electric car, which according to its website, is fully electric and sets a new standard for this kind of vehicle. Through this agreement, four electric models could soon be produced in Nuevo Leon by Tesla, Kia, Hyundai and Navistar.

BMW to Expand Solar Capacity at Mexican Plant

BMW is set to double its on-site self-supply capacity in San Luis Potosi. The expansion includes the installation of a larger solar park, which is expected to generate enough power to cover 26% of the plant's total energy consumption. This increase in capacity will enable the plant to operate at base load solely with its own generation when not actively producing vehicles.

Nearshoring Triggers High Demand for Auto Parts

Stringent rules of origin, which establish that 75% of all essential auto-parts must be provided by regional businesses, have spurred a hunt for suppliers in the country. “The highest nearshoring demands are concentrated in the metal-automotive sector,” said René Mendoza, National President, Mexican Industry Supplier Chain.

Photo by:   Julian Hochgesang

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