Stellantis Restructures in Mexico, Cuts US Reliance Amid Tariffs

Stellantis is reorganizing its operations in Mexico to reduce reliance on the US market, addressing escalating tariff pressures and operational risks. Simultaneously, the company faces mounting legal challenges in Europe regarding defective airbags.

"Historically, we have focused our resources primarily on the American market. The challenge now is to shift part of that focus to the Mexican market," said Daniel González, CEO, Stellantis Mexico. He highlighted that tariffs under USMCA rules could reach up to 52.5% for vehicles failing to meet local content requirements. 

As part of this strategic shift, Stellanting plans to redirect some production capacity from exports to domestic sales. The company is evaluating ways to adapt its manufacturing lines, originally designed for large pickup trucks and premium SUVs, to produce subcompact cars and smaller SUVs that are more popular in Mexico. 

The Toluca plant, which exports over 80% of its output to the United States, recently experienced a temporary shutdown, exposing vulnerabilities in the export-reliant model. “We need to take a step back and simplify. Today, we ask a salesperson to know dozens of models and versions, which can drive customers away,” González added. 

Stellantis, which currently sells over 30 models across multiple brands in Mexico, is reassessing its product lineup. González described the current complexity as unsustainable and noted that aligning offerings with Mexican consumer preferences is a priority.

“We must avoid being left with unsold inventory,” González said, adding that temporary production pauses are part of a preventive strategy to adapt to shifting demand. The company is considering scenarios such as gradual reconversion, line reorientation, or full relocation of production facilities, depending on trade regulation developments.

Chinese automakers present another significant challenge. “If a competitor with five or six times your scale enters without needing to localize or invest, you risk destroying jobs,” González warned, citing Thailand as a cautionary example.

Mexico’s temporary waiver of the 20% tariff on electric vehicles from non-FTA countries, including China, expired in 2024. During the waiver period, Chinese EVs priced under MX$400,000 (US$23,700) flooded the market. 

Beyond exports, González emphasized Mexico’s manufacturing importance within Stellantis' global strategy. “In Coahuila, we have five complexes producing Hemi and Hurricane engines. Counting the stamping plant, we operate seven facilities, plus an engineering center and a parts distribution center”, he said.

Stellantis is also grappling with legal issues abroad. A civil court in Turin, Italy, has accepted a class-action lawsuit regarding defective Takata airbags. Italian consumers have 150 days to join the suit, with a court hearing set for Nov. 21. Codacons, a consumer advocacy group, estimates potential compensation at €285 million (US$323 million).

The company acknowledged the case, emphasizing that the court's decision pertains only to the lawsuit's admissibility and does not imply liability or damages. Stellantis has been managing recalls since 2023 for airbags that could explode under hot and humid conditions—a defect linked to Takata, which filed for bankruptcy in 2017.

Stellantis stated it continues to work “tirelessly” on its recall campaign, spanning hundreds of thousands of Citroën and DS vehicles across 24 countries. Similar lawsuits are underway in France.