Honda Halts Mexico Output on Chip Shortage; COMPAS Plant Closes

This week in auto news: Honda has halted vehicle production in Mexico due to a disruption in semiconductor supply from Nexperia, while the Nissan–Mercedes-Benz joint venture has ended, prompting the closure of the COMPAS plant. EV and hybrid sales surged 67% in 2024, driven by growing automation and foreign investment. The COMPAS facility is scheduled to cease operations in 2026 as regional trade policies and nearshoring continue to reshape production strategies.

More news below:

Mexico's Blueprint for Advanced Manufacturing, R&D, Innovation

Mexico is redefining its industrial landscape, transitioning from a manufacturing powerhouse to a hub for advanced research and innovation. In 2024, the country attracted US$36.87 billion in foreign direct investment (FDI), with 54% directed to manufacturing, primarily in transport equipment, according to the Ministry of Economy. The automotive sector alone accounted for US$23.98 billion, reinforcing its role as the backbone of Mexico’s advanced manufacturing capacity.

Honda Halts Mexico Production After Losing Nexperia Chip Supply

Honda halted vehicle production in Mexico after losing access to semiconductor supplies from Nexperia, a Dutch-based chipmaker. On Oct. 28 the company announced it had suspended operations at local plants and is taking steps to limit the impact. “We are doing everything possible to minimize the effects of this supply interruption,” Honda said.

Toyota Denies US$10 Billion US Investment, Counters Trump Claims

Japan’s Toyota clarified that it did not explicitly promise to invest US$10 billion in the United States, contradicting statements made by US President Donald Trump during his visit to Japan earlier this week.

Plug-In Hybrids Cut Emissions by Just 19%, Report Finds

Plug-in hybrid electric vehicles (PHEVs), long promoted as a bridge to full electrification, emit nearly as much carbon dioxide as conventional petrol and diesel cars, according to a new analysis by Transport & Environment (T&E) based on European Environment Agency (EEA) data. The study analyzed 127,000 PHEVs registered in 2023 and found their real-world CO₂ emissions averaged 135 g/km, compared with 166 g/km for petrol and diesel vehicles.

Mexico’s EV Market Grows 67% in 2024, Hybrids Top Sales

Mexico’s adoption of electrified vehicles reached 124,000 units in 2024, a 67% increase from 2023, though hybrids continue to dominate the market. Hybrid vehicles accounted for 74% of total electrified sales, while pure electric models represented 19.6% and plug-in hybrids 6.4%.

Manufacturing Reinvented: Disruptive Tech Boosts Competitiveness

The integration of disruptive technologies is reshaping Mexico’s automotive and aerospace manufacturing sectors. In 2023, 5,832 industrial robots were installed in Mexico, 70% of them in the automotive industry. An additional 5,600 units were added in 2024, reflecting sustained growth despite a slight year-over-year decline, according to the International Federation of Robotics (IFR). This trend underscores the broader adoption of automation across Mexican industries.

Mexico’s Auto and Aerospace Sectors Navigate Tariffs, Talent Gaps

Mexico’s automotive and aerospace industries are undergoing significant adjustments due to new US tariffs and shifting trade conditions. Between January and September 2025, light vehicle exports fell 0.9%, according to INEGI, while aerospace sector growth slowed to 9%, below post-pandemic averages, according to FEMIA. Tariffs of 25% on vehicles and parts with non-US content, and 50% on steel and aluminum, are reshaping cost structures and prompting companies to rethink supply chains and production strategies.

Swedish Investment Strengthens Mexico’s Automotive Industry

Sweden views Mexico as a strategic partner and a key market in the region, says Alexander Peyre, Counselor at the Embassy of Sweden. Swedish companies continue to expand operations in Mexico, deepening supply chain integration and strengthening collaboration in advanced manufacturing and automotive technologies.

Mexico Drives North American Automotive Resilience and EV Growth

Mexico is consolidating its position as a strategic hub for North American automotive production amid geopolitical uncertainty and ongoing supply chain challenges. The country has become a top nearshoring destination, supported by the USMCA.

Canada Cuts GM, Stellantis Tariff Quotas Ahead of USMCA Review

Canada reduced tariff-free import quotas for General Motors and Stellantis following their withdrawal of manufacturing investments in Ontario, a move that heightens trade tensions with the United States ahead of the scheduled review of the United States-Mexico-Canada Agreement (USMCA). The policy links trade access to domestic production commitments and signals a shift in Canada’s approach to automotive policy in North America.

Volvo 3Q25 Profit Beats Estimates Despite 8% Drop in Sales

Volvo reported 3Q25 operating profit above market expectations, driven by savings from a US$1.9 billion cost reduction plan. Operating income surpassed analyst estimates despite an 8% year-to-date decline in global vehicle sales through September.

Mazda to Continue Vehicle Production at Salamanca Plant

Mazda has confirmed that its automotive plant in Salamanca, Guanajuato, will continue operating in Mexico, producing vehicles for both domestic and export markets, officials announced. The statement followed a meeting between President Claudia Sheinbaum and Mazda CEO Masahiro Moro on Oct. 22, 2025.

Nissan-Mercedes JV COMPAS to Close in May 2026 Amid Market Shifts

Cooperation Manufacturing Plant Aguascalientes (COMPAS), a joint venture between Nissan and Mercedes-Benz, confirmed it will cease operations on May 31, 2026. The closure reflects shifts in the automotive market, evolving consumer preferences, and recent US tariff measures affecting imported vehicles and parts.

The Last Quarter of the Year: What to Expect in Auto Sector

During the USMCA review and renegotiation, the countries are expected to discuss what role China should play in the North American automotive industry. The US government has imposed 100% tariffs on Chinese vehicles to protect its market and local manufacturers. Yet, it remains unclear whether China will be able to produce vehicles in the United States or Mexico and sell them within the region.

Stronger Together: The Future of North American  Auto Sector

Seventy-four percent of the components in vehicles built in Mexico come from the United States, while less than 5% depend on Asia. That complementarity is the true engine of regional competitiveness.