Mexico’s Auto Parts Industry Leads Investment Surge in the Automotive Sector

Mexico’s Auto Parts Industry
Published 02/19/2025

Mexico's auto parts sector is seeing a significant surge in foreign direct investment (FDI), fueling growth in key industrial hubs like Nuevo León, Guanajuato, and Querétaro. While investment in new vehicle assembly plants has slowed, component suppliers are expanding rapidly, reinforcing Mexico’s role in the North American automotive supply chain. This shift, driven by the growing demand for regionally produced parts under the United States-Mexico-Canada Agreement (USMCA), further solidifies the country's position as a key manufacturing hub.

Auto Parts Industry Leads Foreign Investment in Mexico

Mexico is currently the world’s fourth-largest producer of auto parts and the seventh-largest vehicle manufacturer. Despite its strong position in vehicle production, investment in new assembly plants has slowed in recent years, while auto parts manufacturing has emerged as the primary driver of FDI within the sector. The shift reflects the growing importance of regional supply chains and Mexico’s role in supporting the North American automotive market.

While major carmakers in Mexico have focused on modernizing existing facilities, the auto parts industry has expanded aggressively. Investment in new production lines and capacity increases across several states highlight a broader transformation in Mexico’s automotive industry.

 
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Key Investments in Mexico’s Automotive Industry

The last major automaker investment in a new assembly plant occurred in 2015 when Toyota launched its facility in Guanajuato. Since then, major automakers have continued strengthening their existing operations through substantial reinvestments:

  • Nissan allocated $700 million in 2022 to enhance its complex in Aguascalientes.
  • General Motors (GM) committed $1 billion to its Ramos Arizpe plant for electric vehicle production.
  • Toyota, Volkswagen, Audi, BMW, and Stellantis have also injected capital into modernizing their plants.

As automakers focus on optimizing their operations, the auto parts industry is experiencing rapid expansion, solidifying its role as the driving force in Mexico’s automotive sector.

Auto Parts Investment Sees a Significant Increase

Preliminary estimates for 2024 suggest that foreign direct investment in Mexico’s auto parts industry will rise by 25.4% compared to the previous year. The National Auto Parts Industry Association (INA) reported that in 2023, auto parts investment reached $2.55 billion, surpassing investments made by vehicle manufacturers.

Among the automakers, Toyota was the only company to announce a $1.45 billion investment in 2023, focused on modernizing its facilities. This pales in comparison to the continued surge in capital flowing into the auto parts sector.

Industry experts attribute this trend to the USMCA, which has increased the Regional Value Content (RVC) requirement for North American-assembled vehicles from 62.5% under NAFTA to 75% under USMCA. This policy encourages manufacturers to source components within the region, boosting demand for Mexican-made parts.

In 2023, Mexico’s total auto parts production reached $120.4 billion, and forecasts indicate that this figure will climb to $122.89 billion in 2024, reflecting a 2.1% growth. The United States remains the top destination for Mexican auto parts exports, accounting for 87% of shipments, followed by Canada at 3.7%.

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Mexico’s Strategic Role in the North American Supply Chain

With its deep integration into the North American supply chain, Mexico has established itself as an essential hub for automotive production and exports. The country’s role as a key supplier of components supports vehicle assembly operations across the region further reinforces its importance within the global industry.

While potential shifts in trade policies have sparked discussions about future challenges, Mexico’s manufacturing sector continues to demonstrate resilience and adaptability. The country’s high-quality production standards and its ability to meet increasing demand for regionally sourced components under the USMCA are recognized internationally.

The rapid expansion of Mexico’s auto parts sector highlights its growing influence in global automotive manufacturing. As automakers continue to seek reliable and cost-efficient suppliers within North America, Mexico remains a preferred destination for investment, further strengthening its position as a powerhouse in the industry.

For companies looking to capitalize on Mexico’s automotive growth, American Industries provides tailored solutions to streamline entry into the market. Contact us today to explore how your business can benefit from Mexico’s thriving automotive ecosystem.

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