Thanks to the low labor costs, quality production, and its proximity to the U.S., Mexico is a world leader in automotive manufacturing. It is the largest export market for U.S. parts and the fourth-largest producer of automotive parts worldwide. By 2025, production is expected to surpass five million units. There is a robust supply chain of Tier 1, 2, and 3 companies that both supply local markets and export their goods to the U.S. and other countries.
For decades, global leaders have benefited from automotive manufacturing in Mexico, including Audi, BMW, Ford, General Motors, Honda, and Kia, among others. As the seventh-largest global passenger vehicle manufacturer, Mexico produces approximately three million vehicles per year, 90% of which are exported, and 76% of which are headed for the U.S. As of 2022, total exports of new passenger vehicles and light trucks were estimated at $63.7 billion USD, and medium and heavy-duty trucks were estimated at $7 billion USD.
With the continuous technological advancements and the introduction of hybrid and all-electric vehicles in recent years, automotive manufacturing will only continue to expand. And with the push toward increased nearshore manufacturing among North American countries, specifically, it’s advantageous to set up operations in Mexico.
With a strong infrastructure and supply chain and the unique benefit of shelter company support already in place, it makes the transition more seamless for U.S. and foreign manufacturers who want to explore opportunities in this sector.
Mexico’s automotive industry attracts companies from around the world because of reduced operational costs without sacrifices to quality. Plus, it’s easier and more incentivized for global companies to import their vehicles to the U.S. due to USMCA and other free trade agreements.
Car manufacturers in Mexico produce 40 brands and 500 models of vehicles and need suppliers within close proximity to fulfill the needs for machinery and equipment, materials, components, and more. Geographical location is essential to an overall strategy in order to minimize inventory volumes and facilitate timely deliveries.
With a high concentration of automotive manufacturing hubs throughout the northern region, Mexico is a prime location for U.S. manufacturers looking to advance their production opportunities. This includes the regions of Baja California, Sonora, Nuevo Leon, and Chihuahua. However, there’s a growing presence of OEMs in other regions as well, including Jalisco, Puebla, and Veracruz, among others.
As automotive manufacturing continues to grow, so will the competition for space. With the rapid growth, it can be overwhelming for a manufacturer just getting started in Mexico. IVEMSA can help you navigate supply chains, trade compliance, and labor laws, in addition to performing site selection and operational cost analyses to determine which area benefits your business goals most.
Car manufacturers in Mexico are present in 19 states, though different regions specialize in different products and systems. We’ll help you find the site located nearest to the suppliers or assembly plants you need. Strategic placement allows you to save on transportation costs and minimize disruptions regarding delivery timelines. Through our in-depth site selection process, we’ll research building rates, utilities, transportation routes, and more to help you make the best possible decision for your company.
Mexico’s labor costs are the lowest in North America, and companies typically save 40-50% on personnel expenses after moving their operations. Unlike in the U.S., China, and other regions of the world, Mexico has a high availability of industrial workers equipped to handle a range of roles. Automotive manufacturing makes up 3.5 of the country’s total GDP and employs over one million people. Additionally, our shelter services company has decades of experience recruiting in this market to attract qualified workers and maintain flexibility to scale up or down as needed.
IVEMSA has experts in Mexico’s labor laws and many international trade agreements, including the USMCA, which includes specific regulations for the automotive industry. The USMCA favors North American manufacturing by requiring 75% of all vehicle’s content to be produced in the U.S., Mexico, and/or Canada. Only goods with these requirements receive duty-free access. We’ll make sure you’re in compliance at all times per the USMCA and all other free trade agreements and are implementing the best possible strategy to save on costs.
IVEMSA is your partner through every step of the manufacturing process. We take care of all the administrative responsibilities necessary to get a production up and running. This includes HR and recruiting, taxes and accounting, as well as legal and trade compliance. Together, we create a customized shelter solution that fits your company’s unique needs and is adaptable to meet changing demand.
Learn more facts about the advantages of moving your automotive manufacturing operations to Mexico.
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