{"id":21047,"date":"2025-10-23T14:49:48","date_gmt":"2025-10-23T19:49:48","guid":{"rendered":"https:\/\/puertointerior.guanajuato.gob.mx\/blog\/?p=21047"},"modified":"2025-10-23T14:49:48","modified_gmt":"2025-10-23T19:49:48","slug":"nearshoring-and-negotiations-trends-in-mexicos-automotive-supply-chains","status":"publish","type":"post","link":"https:\/\/puertointerior.guanajuato.gob.mx\/blog\/2025\/10\/23\/nearshoring-and-negotiations-trends-in-mexicos-automotive-supply-chains\/","title":{"rendered":"Nearshoring and negotiations: Trends in Mexico’s automotive supply chains"},"content":{"rendered":"
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With US tariffs forcing firms to creatively reimagine their supply chains to build resilience, Mexico finds itself with unprecedented opportunities to strengthen its standing on the global automotive stage, but uncertainty around a key free trade agreement in North America means uncertainty persists.<\/h2>\n<\/div>\n
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Mexico\u2019s automotive sector is an integral part of North America\u2019s manufacturing industry, with factories from Monterrey to Puebla producing a vast array of vital parts. As global carmakers reconsider their supply in the wake of the Covid-19 pandemic and geopolitical tensions, not least tariffs in the US, Mexico has emerged as a favoured hub for nearshoring \u2013 close enough to the US to keep costs low and mitigate risk, yet separate enough to take advantage of competitive labour and trade incentives.<\/p>\n

The industry\u2019s success, however, rests on shifting ground, with the impending review of the US-Mexico-Canada Agreement (USMCA) set to reopen debates over rules of origin and labour standards. Meanwhile, cross-border freight corridors are feeling the weight of booming trade, forcing firms to rethink logistics and consolidation strategies. Alongside this, a new initiative backed by Mexico\u2019s government is aiming to develop the country\u2019s first domestic EV manufacturer, supporting Mexico\u2019s ambition to cement itself as a fully-fledged automotive innovator in an increasingly electric and geopolitically-charged market.<\/p>\n

Anticipation of the USMCA review<\/h3>\n

Something with the potential to significantly impact automotive supply chains in Mexico from next year is the upcoming review of the USMCA, which entered into force on July, 1, 2020. It replaced the North American Free Trade Agreement (NAFTA), which had been in place since 1994.<\/p>\n

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As Lailah Aridi Efaz, director of global public policy at Toyota Motor Manufacturers North America, highlights, one of the novel features of the USMCA is its inclusion of a provision that allows it to adapt and change, rather than existing \u201cin perpetuity without any thought of what the impacts and benefits actually are.\u201d<\/div>\n<\/div>\n<\/div>\n

And with the agreement up for review in July 2026, Efaz outlines three potential outcomes of negotiations. The three parties could agree to renew the USMCA for another 16 years, they could agree to revise it \u2013 which Efaz says would involve annual meetings for up to years to understand how to fix it \u2013 or they could decide to terminate it, but this final option would be a little more complicated than it might sound. \u201cEven if they take that third path, it doesn’t end on that day \u2013 it still would have to exist for another 10 years and they have the opportunity to fix it,\u201d Efaz explains.<\/p>\n

Offering insight into what might be discussed during next year\u2019s USMCA review, Efaz says: \u201cI think we should fully expect the spotlight to be on autos. I think there will be a look at the current regional value content requirements as well as the labour wage content requirements.\u201d<\/p>\n

According to Efaz, we can also expect to see attention being given to issues outside of North America, such as concern about transshipment or circumvention into the supply chains. \u201cI think we should also look at using unique approach approaches to aligning the North American market on not just trade rules, but also investment screening, export controls and other things like the or Uyghur Forced Labor Prevention Act (UFLPA) \u2013 non-tariff related issues like forced labour \u2013 to squeeze any of that out of supply chains in our region.<\/p>\n

Speaking on next year\u2019s USMCA review, Rogelio Garza, head of the Mexican Association of the Automotive Industry (AMIA), said that the outlook is complex, but added that Mexico was prepared for it. To navigate this complexity, Garza is advocating for increased coordination amongst industry groups across North America.<\/p>\n

Meanwhile, Francisco Gonzalez executive president of the National Auto Parts Industry Association (INA) in Mexico, claims faster development of local tier one and tier two suppliers is needed to strengthen automotive supply chains. This lack of suppliers \u2013 particularly tier two suppliers \u2013 was identified by Manuel Montoya, director of the Automotive Cluster of Nuevo Le\u00f3n (CLAUT) last year. “I am referring to plastic injection, machining, stamping, but especially aluminium industrial processes, which are increasingly used in automobiles and will grow further with the rise of electric vehicles,\u201d Montoya said. \u201cThere is a lack of aluminium suppliers in processes such as extrusion, casting, and forging, as there are almost no companies of this nature in Mexico.\u201d<\/p>\n

He gave examples of instances where buyers seeking aluminium-related products far outnumbered the supply base, such as 11 buyers seeking aluminium forgings but just four suppliers being identified \u2013 all of which were already overloaded.<\/p>\n

Montoya explained that, in his view, the base of the supply pyramid can be expanded in two ways, either by bringing in external companies or developing local suppliers. \u201cImagine the business opportunities for the supply chain with 16 million vehicles demanding 12.5% regional content; this represents a significant opportunity,” Montoya concluded.<\/p>\n

Nearshoring is not a new trend<\/h3>\n

Despite tariff uncertainty undoubtedly having an impact on Mexico\u2019s automotive supply chains, the trend of nearshoring in Mexico actually pre-dates Trump\u2019s second term in the Oval Office. \u201cNearshoring is a historic opportunity for Mexico,\u201d Lizette Gracida, senior director of external affairs and trade compliance at Toyota\u2019s Mexico division, said at the 2024 Automotive Logistics Supply Chain Mexico conference.<\/p>\n

Mexico is currently ranked 13th<\/sup>\u00a0on the Savills Nearshoring Index, which assesses countries\u2019 attractiveness for relocating supply chain based on four key factors: resilience; economic cost; business environment; and ESG performance.<\/p>\n

Savills associates explained that Mexico\u2019s performance on the 2024 Nearshoring Index can partly be attributed to an increase in its cost differential to other markets and increased demand from manufacturers such as Volvo and BYD.<\/p>\n

Gracida made reference to the Nearshoring Index in 2024, noting that several key obstacles \u2013 limited logistics infrastructure, clean energy availability and complex trade facilitation processes \u2013 will need to be overcome to improve Mexico\u2019s ranking.<\/p>\n

Mexico is currently an attractive proposition for OEMs \u2013 both for the domestic market and access to the South American market. For example,\u00a0Renault recently opened a new logistics centre for automotive parts\u00a0in the country to support its supply chain operations in South America and domestic parts and aftersales operations, with Jes\u00fas Gallo, CEO of Renault M\u00e9xico, highlighting Mexico\u2019s \u201cspectacular supplier base\u201d as a benefit to the region. In 2024, Mexico produced almost 4 million automobiles, marking a 5.56% year-on-year increase. Total production is forecast to grow again by 2.7% in 2025.<\/p>\n

In addition to this, Hyundai Mobis recently expanded its operations in Mexico, opening a new EV battery plant in Pesquer\u00eda, Nuevo Le\u00f3n \u2013 the first to be established in the state. The new facility represents an investment of $28.6 million and is expected to generate more than 200 new jobs.<\/p>\n

Cross-border freight consolidation<\/strong><\/p>\n

Cross-border shipments, being more complex than domestic logistics, can often be pain points for automotive supply chains with operations in both the US and Mexico. One strategy that is becoming more popular for improving the efficiency of cross-border shipments is freight consolidation.<\/p>\n

For example, logistics service provider\u00a0CH Robinson recently reconfigured its operations in Mexico, consolidating its freight in the country and combining this with cross-border transport, customs brokerage and bonded warehousing to overcome inherent inefficiencies in cross-border supply chains.<\/p>\n

This service was designed to overcome inherent inefficiencies in cross-border shipping, where trucks crossing from Mexico into the US are often underutilised. As Mexican law requires all freight on a truck to be cleared by the same customs broker, consolidating less-than-truckload freight at a secure facility in Mexico and before it is moved across the border can allow for earlier inbound visibility and costs savings through optimised routes and lower tariffs. According to CH Robinson, the new service can save cross-border shippers up to 40% in costs and gives them visibility to their freight up to 48 hours earlier.<\/p>\n

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\u201cSay you\u2019re a company that assembles vehicle seats in the US, and you\u2019re importing foam, fabric, a wiring harness, a motor and switches from five different suppliers in Mexico. Those are coming to the border on five different trucks, five different transfer carriers are taking the loads across, and only then your freight might be consolidated for delivery to your warehouses or plants,\u201d explains Jay Cornmesser, vice president for Mexico cross-border services at CH Robinson. \u201cYou\u2019re unnecessarily paying for too many trucks and unnecessarily paying for unused space on each truck.\u201d<\/p>\n<\/blockquote>\n

Ben Bidwell, senior director for customs at CH Robinson added that the consolidation can provide some relief from US tariffs. \u201cWe can move freight in bond, meaning it can enter the US through a bonded warehouse to defer US tariffs for better cash flow or even eliminate tariffs in the freight is passing through to Canada,\u201d Bidwell said. \u201cBecause auto parts and components are one of the top items flowing across the Mexico border, this is particularly attractive for automotive supply chains subject to the 50% tariffs on items containing aluminium or steel.\u201d<\/p>\n

CH Robinson is not the only company to take advantage of this strategy. Power management company Eaton partnered with Uber Freight to consolidate different methodologies for finance, IT and standard operating procedures at each of its eight plants in Mexico. Instead of switching between eight individual customs brokers, Uber Freight explains that its TMS \u201cintegrated all operations, KPIs, management and communications in one place to promptly identify and execute opportunities for improvement\u201d.<\/p>\n

As a result, Eaton was able to create a standard set of processes and, using Uber Freight\u2019s network and infrastructure, \u201celiminate the complexities associated with the customs process and stay in compliance with Mexican and US regulations\u201d.<\/p>\n

Foreign Trade Zones (FTZs) are also playing an important role in many firms\u2019 strategies for minimising the impact of US tariffs. FTZs are special areas in the US that allow companies to reduce import duties and other costs. According to research company Trade Treasury Payments, a record number of importers are turning to FTZs and bonded warehouses as a means of managing rising costs and operational uncertainty in the wake of the tariffs. \u201cIndustry data confirms a surge in FTZ participation, with the National Association of Foreign Trade Zones (NAFTZ) reporting all-time high membership figures and a steep rise in inquiries from businesses across sectors,\u201d Trade Treasury Payments says.<\/p>\n

It also claims that logistics service providers are seeing \u201ca corresponding spike in demand\u201d, with some firms using bonded storage on a short-term basis \u2013 holding goods temporarily while monitoring how trade negotiations evolve \u2013 and others fast-tracking FTZ applications to gain longer-term optionality.<\/p>\n

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This is something that has been seen near the US-Mexico border, where FTZs can act as staging for exports or re-exports into the US. In January this year, operator of intermodal, finished vehicle and depot service terminals ConGlobal announced the opening of a new storage facility in FTZ 94, located in Laredo, Texas \u2013 which ConGlobal describes as \u201ca vital gateway for cross-border trade\u201d. Highlighting the benefits of the facility, ConGlobal describes it as \u201can ideal staging area for goods and equipment, allowing for efficient coordination and seamless transitions between transportation modes,\u201d noting that it is strategically positioned near the I-35 and Hachar Parkway expansion serving as a hub for cross-border traffic into and out of Mexico.<\/p>\n

Meanwhile Distrubi, a third-party logistics company specialising in cross-border logistics, explicitly states that its FTZ warehouse in Laredo can be leveraged to avoid tariffs while goods are stored or assembled and deliver products to Monterrey, Nuevo Le\u00f3n within three hours.<\/p>\n

A rise in demand for FTZ warehousing could impact automotive supply chain operations near the US-Mexico border, potentially leading to increased demand for services such as container handling, cross-border drayage and yard management for the storage and movement of automotive parts inside these zones.<\/p>\n

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Mexico\u2019s first homegrown EV OEM<\/h2>\n
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The Mexican government has bold ambitions when it comes to expanding the country\u2019s position as an automotive hub. At the beginning of the year Mexico\u2019s president, Claudia Sheinbaum, announced \u201cOlinia\u201d, Mexico’s first manufacturer of mini EVs \u2013 set to transform automotive supply chains in Mexico.<\/p>\n

By investing in this project, the Mexican government intends to create a \u201csmall, affordable electric car\u201d that is designed and assembled entirely in Mexico. \u201cOlinia must be a small, safe and electric vehicle \u2013 one that can be charged from any outlet and built primarily with Mexican components,\u201d Sheinbaum says.<\/p>\n

This project could have a significant impact on Mexico\u2019s automotive supply chain and logistics landscape, as it is expected to create local jobs and make use of domestic resources.<\/p>\n

Part of the plan is the creation of regional assembly plants. This, the Mexican government has said, is to help reduce transportation and logistics costs, which is key to maintaining an affordable price point for consumers. Localisation can be an appealing strategy, both for cost reduction and for increasing resilience, with local supply chains less vulnerable to tariff-related disruptions to cross-border shipping.<\/p>\n

The Olinia project forms part of the Mexican government\u2019s \u201cPlan M\u00e9xico\u201d, which establishes the country\u2019s national development strategy for the next five years. The wider goal of Olinia is to increase vehicle production for national consumption by 10% and increase national content by 15% through \u201cthe substitution of vehicle imports, by substituting imports of electronic components for vehicles, expanding aluminium auto parts production, and developing battery cell production for electric vehicles\u201d.<\/p>\n

Coordinated by the Secretariat of Science, Humanities, Technology and Innovation (Secihti) and developed jointly by the Instituto Polit\u00e9cnico Nacional (IPN) and the Tecnol\u00f3gico Nacional de M\u00e9xico (TecNM), the country\u2019s federal government has allocated an initial investment of 25 million pesos ($1.4 million) to the project.<\/p>\n

It is hoped that Olinia will begin producing three vehicle models by 2030: a personal mobility vehicle; a neighbourhood mobility vehicle; and a last-mile delivery vehicle, ranging in price from 90,000 to 150,000 pesos ($4,913-$8,190).<\/p>\n

All three vehicle models will be all-electric, which will support Mexico\u2019s energy transition by reducing fossil fuel dependence and cutting urban emissions, while the compact nature of the vehicles is expected to improve urban mobility in Mexico\u2019s cities. \u201cOlinia is more than a car \u2013 it represents Mexico\u2019s capacity to innovate for the wellbeing of its people and for the planet,\u201d Sheinbaum added.<\/p>\n

Olinia vehicles are due to be unveiled at the opening match of the 2026 World Cup, taking place in Mexico City, with the tournament spanning Mexico, Canada and the United States. The Mexican government had planned to showcase the designs of two vehicles \u2013 one domestic, one commercial \u2013 in September, but at time of writing no such designs have yet been presented.<\/p>\n

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Publicado originalmente por:\u00a0https:\/\/www.automotivelogistics.media\/nearshoring\/nearshoring-and-negotiations-trends-in-mexicos-automotive-supply-chains\/1604471<\/a><\/div>\n<\/div>\n<\/div>\n<\/div>\n
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