US Tariffs Shift Auto Investment Away from Mexico

Mexico is unlikely to attract new automotive investment in the short term as US tariff policies continue redirecting capital and production capacity, according to Guido Vildozo, senior manager and associate director, S&P Global Mobility. Speaking at the AMDA Automotive Forum 2025, Vildozo said the United States has secured US$50 billion in new automotive investment over an 11-month period following tariff implementation, compared to the US$40 billion Mexico captured over the past decade.

“We are seeing part of the announced production moves already taking place,” Vildozo said, noting that these shifts reflect the immediate impact of US protectionism on North America’s manufacturing landscape. He referenced General Motors’ decision to shift production volume from its Silao plant to Ramos Arizpe and to the United States, and noted that Stellantis will also relocate part of its planned output to US facilities. These changes, he said, are driven primarily by the exposure of models produced in shared US-Mexico facilities and by profitability considerations.

The tariff regime has imposed significant costs on automakers importing vehicles into the US. Companies are allocating between US$200 million and US$850 million per month to cover the charges. “For a small brand, these tariffs represent a cost of US$200 million. For some of the larger players, they represent up to US$850 million,” Vildozo said. He added that the situation is creating pressure across the global automotive ecosystem as companies seek ways to offset the impact.

Despite these higher costs, automakers have kept US consumer prices mostly stable. “Prices in the United States have only increased between one and two percent,” he said, explaining that companies are absorbing the tariffs, which has eroded profit margins. “It is a calibration process, and the financial reports for the second and third quarters show margins have fallen sharply,” he added.

Vildozo expects a global price-adjustment cycle, noting that increases will emerge across multiple markets as companies search for ways to subsidize tariff-related costs. “The price increase in different markets is not limited to Mexico. We know that even markets such as Thailand are being considered to subsidize part of this adjustment,” he said. The adjustment cycle, he added, began in July and August and will continue as long as production and import levels for the United States remain uncertain.

Mexico’s production outlook is trending downward as a result of this reconfiguration. Vildozo said North America will see higher manufacturing volume in the United States and losses in Canada and Mexico. “We will have lower production figures than in the past,” he said. He added that the region requires 16.5 million units per year to maintain margins and that planned investment in electric vehicles is insufficient to meet future demand. “This means fewer new model launches,” he noted.

Mexico, he added, will not return to past production peaks. “The country will not return to levels near four million units. It will most likely remain in a range of 3 to 3.5 million,” he said. He cited General Motors’ decision to eliminate a third shift in Ramos Arizpe—resulting in about 800 layoffs—and its announcement of US$4 billion in new investment to relocate production of models such as the Chevrolet Blazer and Equinox to the United States beginning in 2027.