Chinese OEMs Expanding in MexicoBy Jorge Ramos Zwanziger | Wed, 04/07/2021 - 09:14
Chinese automotive manufacturers are blooming in Mexico as the country has provided a favorable environment for their growth. Mexico saw four different Chinese automakers enter the country, some more successfully than others.
FAW paved the way for new Chinese arrivals in 2008, tackling some challenges when it addressed the cultural differences between Mexico and China. The company, however, failed to thrive in the Mexican market. “The Chinese are very persistent and the second wave of companies will take advantage of the teachings of their predecessors; we already saw FAW fail in its attempt to conquer the light-vehicle market and companies will learn from that,” said Florian Haft, Plant Manager at Sonavox, in an interview with MBN.
BAIC and JAC, followed FAW, arriving in Mexico in 2016. Both companies found a more welcoming environment as the stigma regarding the quality and cheap prices of Chinese products is changing, explains Haft. “China today markets many products across the world and its quality is improving a lot. It is not like before. Today, we are offering more technological products at very competitive prices,” he added.
JAC and BAIC
The stigma surrounding Chinese products has been somehow lifted, allowing companies like BAIC and JAC to perform better in the Mexican market. “We started selling BAIC cars in June 2016 and we are satisfied with our results so far. In 2017, BAIC commercialized around 1,500 units and opened 22 dealerships around the country, with three in Mexico City. We are the first Chinese automaker to come to Mexico in 10 years after FAW’s failed attempt to enter the market. BAIC is now a representative of the quality of Chinese vehicles,” said Patrick Yang, Director General of BAIC de México, in an interview with MBN back in 2018.
“The Mexican market for us is the first step in getting closer to other markets. In the past four years, we have learned a lot from this market. In 2019, we sold around 300 vehicles in Mexico and we believe more and more Mexican customers are getting to know the BAIC brand and how our vehicles perform,” Yang added in another interview with MBN in 2020. He explained that the company’s venture into Mexico was also a way to enter the USMCA market, hoping to later be able to expand into Canada and the US. Last year, however, the company did not fare well due to the impact of COVID-19, commercializing 52 percent fewer vehicles than it did in 2019, according to El Universal.
JAC was another recent Chinese newcomer. The company arrived in the country by the hand of local manufacturer Giant Motors Latinoamérica, who became a local assembler for the Chinese OEM. “Today, there are 30 JAC stores nationwide managed by the 20 best and largest dealership groups in Mexico. Dealerships handle all maintenance and repairs and the exhibition of vehicles is completely digital. The level of investment made by dealers has been extraordinary and the brand has grown in profitability and unit sales quite well,” said Elías Massri, Director-General and Chairman of Giant Motors Latinoamérica, during an interview with MBN.
For JAC, 2020 was a much friendlier year. The company managed to contain its sales contraction to only 9.3 percent. The company sold 4,271 units that year. In an interview with El Universal, Massri said that convincing the Mexican market of JAC’s vehicle quality required adapting the product to local needs. “The Made in Mexico seal makes us proud, the vehicles are assembled, conditioned and tropicalized according to the needs of the national market, at the height and the peculiar handling of the country,” said Massri
The New Contender: MG Motors
MG Motors, a UK company backed by China’s largest car manufacturer, SAIC Motors, came to Mexico in late 2020. MG Motors’ British origins have helped the company gain acceptance in the Mexican market, told Daniel Nava, MG Motors Vice President of Operations, to El Universal. Over the course of five months, the company has sold around 2,000 vehicles and opened 19 dealerships in the country. The company’s goal is to reach a 1.5 percent participation in the Mexican market.