GAC Group Weighs Knock-Down Production in Mexico

GAC Group said it does not rule out producing vehicles in Mexico as it evaluates options to manage tariff exposure and support growth in its largest Latin American market. The company raised the possibility during its 2026 annual distributor convention in Mexico City, attended by 30 leaders from automotive dealer groups and senior executives, including GAC International President Wayne Wei, Global Vice President Jack Lyu, and GAC Mexico President Rafe Huang. Executives framed the discussion in terms of long-term market positioning rather than short-term investment decisions, emphasizing that Mexico’s role within GAC’s global footprint continues to expand.

Company executives said Mexico represents GAC’s largest sales volume in Latin America and has become strategically important within its international operations. Although the company commercializes vehicles in more than 60 markets, GAC selected Mexico as the location for its first overseas subsidiary outside China. Management described the country as a key pillar of the “One GAC 2.0” strategy, which seeks to balance geographic expansion with stronger performance in existing markets through product planning, technology deployment, and customer engagement.

During the convention, GAC executives addressed the option of manufacturing vehicles in Mexico in response to shifting global tariff conditions. The company said it is evaluating a knock-down manufacturing model under which major components, such as engines and transmissions, would be imported while final assembly would take place locally. Executives said this structure could allow vehicles to meet domestic manufacturing thresholds and reduce exposure to import tariffs, providing greater flexibility as trade policies continue to evolve.

Company representatives added that local assembly could support job creation and the development of a supplier network around a potential production operation. While GAC did not disclose a timeline, investment amount, or location, executives said Mexico remains under active consideration as a manufacturing base.

At the global level, GAC reported annual sales of approximately 3 million vehicles, a figure the company attributed to structured planning and international partnerships. Executives cited long-standing alliances with Honda and Toyota as central to its manufacturing scale and product development capabilities. 

GAC also highlighted its partnership with Huawei, under which the companies jointly developed the F03, a fully electric vehicle marketed under the jointly owned Qijing brand. Under the arrangement, GAC is responsible for vehicle engineering and manufacturing integration, while Huawei provides digital systems and technology architecture. The company said the F03 is scheduled for its official presentation and the start of series production later this year.

In Mexico, GAC reported that its first full year of operations in 2024 resulted in the opening of 43 dealerships nationwide and projected sales of more than 7,000 vehicles. Based on those results, the company said it plans to introduce hybrid and electric models to the Mexican market in 2025 as part of its strategy to expand alternative powertrain offerings.

GAC’s expansion plans are unfolding as Mexico prepares to implement new import tariffs in 2026 that will affect automakers without free trade agreements. Duties ranging from 5% to 50% will apply to more than 1,000 tariff lines, including vehicles and auto parts. Finished vehicles and components are expected to face the highest rates, increasing cost pressures for import-reliant manufacturers.

Other Chinese automakers are adopting varied responses to the new tariff framework. Chirey Motor Mexico said its long-term strategy remains unchanged, citing contingency planning, a consolidated distributor network, and access to Chery Group’s global industrial platform. BYD is exploring local manufacturing options and has sought exemptions for electric vehicles, while JAC Motors continues to expand localized assembly in Hidalgo.