Nearshoring has become a window of opportunity for different industries in Mexico, including the automotive industry. Its growth -of Nearshoring- was due to world events such as geopolitical conflicts and the pandemic, which generated ruptures or interruptions in supply chains; contributing to the idea of relocating plants and production closer to the final market.
Due to the specialization of its labor force and the resilience of its supply chains, Mexico is emerging as one of the most attractive destinations for this commercial phenomenon. Among the country's competitive advantages are: a skilled and strong labor force; the proximity and familiarity of doing business with the United States; ports of exit on the Pacific and Atlantic oceans; and multiple trade agreements - such as the T-MEC - that offer tariff benefits.
Each variable contributes to a strategy to improve operational efficiency, reduce costs and mitigate risks associated with the global supply chain. According to a Deloitte study, if this model is fully exploited, the country could add 3% to local GDP in the coming years.
Nearshoring is also an opportunity to position Mexico as a key player for a more sustainable future. Applied to the automotive sector, this phenomenon will drive the electrification of vehicles and the use of renewable energy technologies to reduce emissions.
According to data from the Mexican Automotive Industry Association (AMIA), Mexico is the seventh largest vehicle producer in the world, the first in Latin America and the main exporter of automobiles to the United States. It is also the fourth largest auto parts producer in the world, according to the National Auto Parts Industry (INA). This privileged position is due to its infrastructure and its adaptability to the demands of the global market.
The sector is an economic pillar since it accounts for 4.7% of the national GDP, above other industries. In 2023, it contributed 21.7% of the manufacturing GDP, according to AMIA data. In addition, it is the main generator of income, with 107,965 million dollars, above remittances and tourism combined. In terms of employment, the industry generates 2.1 million jobs in the country and Nearshoring could deepen this footprint.
By moving production closer to the U.S. market, companies would reduce delivery times, minimize transportation costs and reduce dependence on distant suppliers. It would also increase flexibility in the face of changes in demand, local regulations and trade tensions, especially relevant for electromobility, one of the biggest challenges in this industry.
Growing concern about climate change has led to a drive to electrify mobility to reduce carbon emissions. In 2023, there were 40 million electric vehicles (EVs) on the road according to Global EV Outlook. And their sales exceeded those of the previous year by more than three times, representing a year-on-year increase of 35 percent.
Mexico has the potential to consolidate its position as an auto parts and EV production hub for the North American market. INA reported that it expects a 20% growth in auto parts production in the next four years due to Nearshoring efforts and, around 2027, it is expected that the electrification of the industry and the regionalization of the value chain will drive the country to become the third largest auto parts producer in the world.