The amount was raised in the face of President Trump's new administration, which has ordered a wide range of tariffs and is considering imposing tariffs on the auto sector.
Mexico will attract a record US$6.925 billion in Foreign Direct Investment (FDI) in the automotive industry (car and truck manufacturing) in 2024.
This attraction of foreign capital was achieved prior to the start of U.S. President Donald Trump's second term, who has ordered a wide range of tariffs and is considering imposing tariffs on the automotive sector.
Trump imposed a 25% tariff on Mexico and Canada, citing a lack of cooperation in addressing drug trafficking and immigration issues, although he later limited the measure to products imported by the United States that do not comply with the free trade agreement between these three nations (USMCA).
Trump also imposed an additional 20% tariff (in two stages) on all Chinese products and a 25% tariff on steel and aluminum originating in Mexico, Canada, and other countries.
Additionally, its tariff threats include: a 25% tariff on copper and derivative imports, "reciprocal tariffs," and tariffs on other sectors, such as the automotive, pharmaceutical, and semiconductor sectors.
During his campaign, he even proposed imposing a 20% tariff on products originating from around the world.
Over the past decade, Mexico's highest FDI in auto and truck production was US$5.091 billion in 2023.
According to German consulting firm Roland Berger, in addition to its low labor and logistics costs, Mexico is an ideal candidate for the automotive industry thanks to its favorable business environment, stable supplier base, and increasingly resilient supply chains.
As a result, US FDI outflows to Mexico in the automotive and related sectors have increased steadily in recent years, at the expense of outflows to China.
Recently, there has been a significant increase in activity and speculation regarding tariffs and duties between the United States and its trading partners, such as China, Canada, Mexico, and the European Union.
This includes recent announcements by the U.S. government about its intention to implement various new tariffs, including those on automobiles.
In this regard, Stellantis stated that tariffs implemented between the United States and its trading partners, or between other major economies, could result in increased production costs, higher consumer prices, lower demand, and/or lower profitability of its automotive products. Furthermore, the availability of components and raw materials could be negatively impacted.
Despite macroeconomic uncertainties, the auto parts company Autoliv forecasts that the global light vehicle market will grow both in the medium and long term, driven by pent-up end-user demand and per capita GDP growth.
Aside from the potential new tariffs, Roland Berger noted that Mexico already has a history of supplying light vehicles and auto parts to the United States.
It has been a leader in both categories for the past decade and has also increased its market share at the expense of competitors such as Canada and China.
In the recent past, Mexico has been characterized as a competitive manufacturing hub, and several major automotive original equipment manufacturers (OEMs) and suppliers have announced significant new or expanded production in Mexico.
TOWARDS ELECTRIFICATION
Some examples include GM's $1 billion investment to convert its Ramos Arizpe plant to produce electric vehicles (EVs); BMW's $872 million investment to begin building EVs at its San Luis Potosí plant; Volkswagen's $764 million investment (over three years) in its Puebla factory; and ZF Group's $245 million investment to expand its Querétaro plant.
Historically, OEMs have manufactured their vehicles in the regions where these units are primarily sold, and as a result, many of them have established manufacturing facilities in multiple countries.
In 2024, Mexico attracted a record US$36.872 billion in FDI, a 2.3% increase compared to the preliminary figure for 2023, according to data from the Bank of Mexico.
Of that amount, 54% was concentrated in the manufacturing sector, with the most notable industries being transportation equipment, beverages and tobacco, chemicals, computer equipment, food, metals, and plastics and rubber.
Mexico's automotive exports grew at a year-over-year rate of 2.7% in 2024, ending a streak of double-digit growth over the previous three years.
These sales reached US$193.907 billion and represented 31.4% of Mexico's total product exports.
In early February, President Trump imposed a 25% tariff on Mexico and Canada, citing a lack of cooperation in addressing drug trafficking and immigration issues. He later limited the measure to products imported by the United States that do not comply with the free trade agreement between the three nations (USMCA).
