Auto Parts Manufacturers Demand Guidelines After Tariff Elimination

The National Auto Parts Industry Association (INA) fears that the lack of guidelines to strengthen the domestic supply chain could slow the relocation of international investment and suppliers to Mexico following the elimination of the 10% tariff on auto parts imports. The measure could benefit Chinese brands by allowing them to import component kits for vehicle assembly in Mexico.

Gabriel Padilla, CEO of INA, confirmed that “this is an issue that affects supply chains” and called for measures to ensure that suppliers continue relocating from Asia to Mexico.

“We believe this could serve as an incentive for auto parts imports, helping to strengthen assembly operations at existing automakers, support new investment projects, and benefit companies already operating in Mexico. It could attract new investment projects and production lines, but we must ensure that these initiatives do not displace the supply already provided by Mexican manufacturers,” he said.

Although the measure took effect in mid-October, the auto parts industry remains confident that guidelines will be issued for importing these parts and components to ensure that the relocation of suppliers from Asia to North America is not disrupted.

“The Ministry of Economy states in the decree that it will issue guidelines (...) and we will be reviewing them,” he said.

Meanwhile, Eric Ramírez, CEO of Urban Science Latam, said that allowing imports under SKD (Semi-Knocked Down) and CKD (Completely Knocked Down) schemes without domestic content requirements negatively affects Mexico’s automotive industry, which has been developing for more than 60 years. This is because automakers are not required to source components from Mexican suppliers.

In response to Chinese automakers’ interest in assembling vehicles in Mexico, the government introduced an incentive waiving the 10% tariff on auto parts used in vehicle assembly.

General Motors recently announced that it would shift production of its Aveo and Groove models from China to Mexico, potentially making the company a beneficiary of the measure.

Olinia, the Mexican government’s electric vehicle brand, will use Asian parts and components until the domestic semiconductor and electronics supply chain is strengthened.

Although the decree appears to promote domestic production, Ramírez questioned whether it would achieve the goals outlined in the Mexico Plan, including import substitution, job creation, and improved living standards.