Mexico’s Automotive Potential Will Overcome Tariffs, Model Predicts

Mexico has what it takes to maintain its relevance in the global automotive industry despite the implementation of tariffs in the United States, so its potential as an international hub for vehicle and auto parts production will continue to develop, according to the results of a forecasting model implemented by the consulting firm Roland Berger.

The analysis indicates that the country has competitive advantages, such as access to skilled labor, its proximity to the US market, and its relative political and regulatory stability. “Many new vehicle models will continue to be cheaper to produce in Mexico due to these factors,” it notes.

The entire supply chain, from original equipment manufacturers (OEMs) to suppliers, has built its manufacturing strategies around Mexico," said Stephan Keese, senior partner at Roland Berger, in an interview with Global Auto Industry.

“The country has become an integral part of global supply chains and engineering strategies,” Keese insisted.

The executive explained that there are regions in Mexico that have made significant progress in investing in education, technology, and infrastructure. “I think that's where we see much more automated and complex manufacturing operations,” he said.

The availability of skilled labor is another advantage, according to the model. “There is less staff turnover in Mexico than in the United States, and companies often find it easier to find skilled workers for engineering positions or as shift supervisors in plants,” Keese added.

The executive said that another relevant result of the model is that it is precisely trade with Mexico that attracts investment to the United States.

“If we want to reindustrialize the United States, we will have to do so through specific investments and incentives, and not by protecting and separating U.S. supply chains from the rest of the world, and especially from our main source of supply, which is Mexico,” he concluded.