Chinese car sales in Mexico surge despite new tariffs

Key facts

• Chinese-brand vehicle sales in Mexico increased by nearly 30% in the first half of 2024.
• Chinese brands captured 17% of the Mexican auto market in the first six months, up from 14% a year ago.
• Mexico imposed a 50% tariff on vehicle imports from China in January.
• Imports of Chinese-brand vehicles decreased by 43% in the first five months of the year.
• Geely, MG Motor, Changan, and Chirey showed strong sales growth, while BYD's sales saw a slight dip.

Despite the imposition of steep tariffs in January, sales of Chinese-brand vehicles in Mexico surged by nearly 30% in the first half of the year, according to a report from the Mexican Association of Automobile Distributors. Chinese brands now account for 17% of new vehicle sales in Mexico, an increase from 14% a year ago, with sales climbing to 137,525 units from 107,712.

Mexico's Deputy Foreign Trade Minister Luis Rosendo Gutierrez suggested the sales figures are misleading, attributing the increase to automakers front-loading shipments ahead of the tariff implementation. He pointed to a 43% decline in imports of Chinese-brand vehicles during the first five months of the year as evidence of the tariffs' impact. Gutierrez stated that the key measure is the halt in imports, not the sales figures.

The expansion of Chinese automakers in Mexico has become a significant issue in trade negotiations between Mexico and the United States, with concerns that Mexico could serve as a gateway for Chinese companies to enter the U.S. market. The tariffs, which include a 50% levy on vehicle imports from China, were intended to protect jobs and reassure the United States.

Among Chinese brands, Geely showed the strongest growth, followed by MG Motor, Changan, and Chirey. BYD, China's largest automaker and the biggest player in Mexico, saw a slight decrease in sales. Industry observers anticipate that Chinese brands will continue to gain market share, albeit at a slower pace, as they are likely to absorb the increased tariff costs to avoid losing ground in the competitive Mexican market.