Mexico Auto Output Dips in 2025 as Exports Fall on Tariff Risks

Mexico’s light-vehicle industry ended 2025 below the four-million-unit production threshold, amid softer export demand and continued uncertainty surrounding US tariffs. According to the Administrative Registry of the Light Vehicle Automotive Industry (RAIAVL) compiled by INEGI, total production reached 3,953,494 units, a 0.9% decline from 2024. Export volumes fell 2.7% to 3,385,785 units.

The United States remained the primary export destination, accounting for 78% of total exports to the United States declined 4.2% year over year, a downturn automakers attributed to tariff uncertainty and weaker US market conditions. Industry sources also pointed to limited growth in the US automotive market, where vehicle sales rose 1.9% in 2025 following the phase-out of federal incentives for electric vehicles. December was described by industry participants as a “cold close” for manufacturers including General Motors, Honda, and Ford.

The slowdown interrupted the positive trajectory Mexican vehicle production had maintained since the Covid-19 pandemic. Domestic sales were the only segment to expand, rising 1.4% from 2024. Between January and December, more than 1.5 million vehicles were sold, up 1.3% from the previous year. “With this result, 2025 closes as the third-best year in sales since records began, reflecting stability in the national market,” the Mexican Automotive Industry Association (AMIA) said. The association also noted that the 3.9-million-unit production level marked “the second-best annual figure on record.”

Tariff-related uncertainty and declining export demand had uneven effects across manufacturers. Production fell 12.2% at Volkswagen, 16.6% at Mazda, 18.4% at Honda, 5.5% at Stellantis, and 3.6% at General Motors. Export declines were particularly steep for several brands, including 16.2% for Volkswagen, 37.6% for Mazda, and 20.5% for Honda. Nissan cut production 12.2%, citing the discontinuation of Infiniti production and weaker US demand. Mercedes-Benz reduced exports by 13.6% and signaled plans to wind down production in Mexico in May 2026. Stellantis, BMW, and Audi also reported lower export volumes.

Mexico enters the USMCA review year with unresolved US Section 232 tariffs on steel, aluminum, autos, and heavy trucks, which continue to influence trade and investment decisions. Economy Minister Marcelo Ebrard said the current automotive tariff mechanism allows discounts based on regional value content, noting that “the higher the level of integration between Mexico, the United States, and Canada in a product, the lower the effective tariff rate.” While this framework provides an advantage over non-regional competitors, industry groups argue it does not eliminate uncertainty or the financial burden on companies seeking to operate without tariff exposure or legal risk.

AMIA has identified the elimination of Section 232 duties as a priority during the USMCA review. “We have a 25% tariff that we have to comply with,” said AMIA President Rogelio Garza. “You can discount the American content, but it is not ideal and it is not what we want. We are going to push for zero.” Additional costs emerged on Nov. 1, when the Trump administration imposed a 25% tariff on medium and heavy trucks and parts, as well as a 10% duty on buses.

Although USMCA-compliant vehicles are subject only to tariffs on non-US content, Mexican officials and manufacturers say the measures undermine competitiveness and discourage future investment. Despite a 7% increase in Mexican exports to the United States during the first ten months of 2025, the Tax Foundation estimates that fewer than 15% of US imports from Mexico and Canada are subject to Section 232 duties. Current and former negotiators say Mexico’s objective is to eliminate the tariffs while preserving the overall structure of the trade agreement.

Green vehicle sales continued to expand in the domestic market. AMIA reported 146,724 electrified vehicles sold in 2025, an 18% increase from 2024, accounting for 9.6% of total national sales. Of that total, 112,117 units were hybrids (76.4%), 20,923 were fully electric vehicles (14.3%), and 13,684 were plug-in hybrids (9.3%).