Global Industry Slows as 100-Million-Unit Production Target Fades

The global automotive industry is revising growth targets as inflation, rising interest rates, and geopolitical uncertainty slow demand and the EV transition. The goal of producing 100 million vehicles annually now appears unlikely, reports Expansión.

“Even the most optimistic forecasts do not see 100 million global vehicles by 2035. It is unlikely we will reach that,” said Eric Ramírez, Director for Latin America and the Caribbean, Urban Science. He added that globalization is shifting toward regional and local production, “prioritizing domestic consumption” over expansion.

The International Monetary Fund forecasts global growth 0.2% lower than expected this year and warns trade tensions could reduce output further in 2026. Higher costs and weaker demand are slowing production and investment. “Automakers are being cautious about their next steps, slowing both production and investment,” said Gerardo Gómez, Senior Director, JD Power Mexico.

Mexico’s target of 4 million vehicles in 2025 is being reconsidered as investment shifts to the United States. Fewer new launches and US protectionist policies require “a more cautious outlook,” according to AMIA.

Several automakers are restructuring production in response to global and regional pressures. Nissan announced it will close its CIVAC plant in Cuernavaca by the end of fiscal year 2025, consolidating operations at its Aguascalientes facility. Similarly, General Motors announced a US$4 billion investment in US plants in 2025, including shifting production of certain Chevrolet models from Mexico to the United States to comply with tariffs and support American manufacturing, although GM confirmed this will not involve closures at its Mexican facilities.

Electrification adds complexity. “To make an electric vehicle you need batteries whose technology is concentrated in a single country, and rare materials are limited to a few nations,” Ramírez said. While decarbonization remains a priority, automakers focus on financial stability and inventory management amid volatile demand.

Legacy automakers are confronting a slowdown in the EV market as consumer adoption lags and incentives in the United States fade. GM reported a US$1.6 billion loss on its EV unit due to excess capacity, Volkswagen idled two German EV plants, Stellantis abandoned its 100% EV by 2030 goal, and Ford delayed full-size EV trucks and vans, shifting investment to hybrids and gas-powered models.