Latam Insights: Mexico—2024 Auto Sector Review

In 2024, Mexico’s light vehicle industry reached record levels of production and exports, while domestic sales surpassed pre-pandemic levels (table 1). Despite a slowdown in annual growth, the supply and demand for light vehicles maintained solid momentum measured by the volume of units. In production and exports, the advance of economic activity in the United States allowed for historical highs despite weakness elsewhere in manufacturing. As for domestic sales, the increase in consumption, along with a greater reach of new market participants, allowed for a recovery to pre-pandemic levels and a nearing of the historical highs of 2016. 

On the domestic demand side, sales of light vehicles closed 2024 with an increase of 9.8% (vs. 24.6% a year earlier), totaling 1,496,797 units (chart 1). However, in December alone, sales rose by 1.9% with 146,356 transactions. In comparison to other retail sales sectors, according to the October INEGI (the Mexican Statistics Office) Commercial Businesses Survey, vehicle and auto parts sales accumulated a real increase of just 0.5% YTD, compared to the -0.5% drop in total retail sales. Meanwhile, vehicle price increases stalled during 2024, growing by just 0.4% y/y (chart 2), well below the headline inflation rate, which closed the year at 4.21%, and the prices of core goods and services (core inflation at 3.65% y/y).

Within domestic sales, new market participants continue to enter, although lost market share in comparison to the previous year (charts 3 and 4, and table 2). Nissan maintained market leadership despite losing market share (17.1% vs. 17.7% a year earlier), while the next three largest players, GM, Volkswagen, and Toyota, increased their market share to 13.5%, 9.2%, and 8.1%, respectively. On the other hand, new participants (Chirey, JAC, MG Motor, and more recently Great Wall, Jetour, and Foton) grew at a lower rate than the total, at 7.5%, leading to a loss of market share (9.5% vs. 9.7% in 2023). Although most new participants are Chinese-origin vehicles, the total number of cars from China increased at a higher rate than average, at 12.0%, representing 22% of total sales during 2024. In contrast, U.S.-origin vehicles grew by 20.8% during the same period, representing 9% of total sales. Domestic-made vehicles grew by 11.9%, representing 38% of total vehicles sold during 2024. The entry of new competitors, along with the normalization of global supply chains, has allowed for a price increase lower than headline and core inflation in recent years. 

On the supply side, vehicle production reached record levels in 2024, totaling 3.989 million units, equivalent to a 5.6% increase (chart 1, again). Comparatively, although vehicle production growth slowed during 2024, it was higher than the average for manufacturing, which showed heterogeneous behaviour during the same period. According to INEGI’s monthly figures for industrial production, during the January–November period, transportation equipment production averaged an annual real increase of 1.6% YTD, contrasting with the manufacturing average of 0.3% and overall industrial output of 0.5%.

Within production, we note contrasting results among brands. GM maintained leadership (table 3), representing 22.3% of total assemblies and achieved the highest growth compared to its competitors, increasing by 23% (chart 4, again). Similarly, Honda and JAC posted double-digit increases during the year. On the other hand, other brands showed declines in the number of units assembled. BMW had the largest decrease, falling by -19.0%, followed by Audi (-17.6%), Mercedes Benz (-15.3%), and Chrysler (-10.3%).

Regarding exports, they also reached record highs during 2024, totaling 3.479 million units on a 5.4% increase compared to the previous year (table 4). Like production, manufacturing exports slowed their growth during the year, although automotive exports have shown a higher rate than the rest of manufacturing due to market strength. By export destination, cars destined for the United States represented 80% of the total, while cars destined for Canada represented 8.5%.

In the heavy vehicle industry, domestic sales also reached record highs in 2024, although production and exports performed negatively during the year (charts 5 and 6). 

Retail sales of heavy vehicles totaled 58,318 units in 2024, representing an increase of 11.1% (vs. 32.2% in 2023, chart 7 and table 5), the smallest advance since the pandemic. Within this, in a market considerably more concentrated than light vehicle sales, cargo trucks dominate, with a total share of 26% of retail units sold during the year. Mercedes-Benz passenger trucks accounted for 7% of total heavy vehicles during the period. In terms of advances, the highest growth was achieved by Dina with 10% in cargo vehicles and 2.4% in passenger vehicles, followed by Hino’s cargo vehicles, which grew by 3.3%.

Wholesale sales of heavy vehicles increased by 22.8%, accumulating 67,704 units (chart 7, again, and table 6). However, we observed an acceleration in recent months, reaching a 71.5% increase in December alone, with increases above 20% and no declines during the last half of the year. Like retail sales, the market was dominated by Freightliner’s cargo vehicles, with 26%, followed by Kensworth (21%) and International (16%). In passenger vehicles, Mercedes-Benz was also the best seller, with 6% of total wholesale sales. 

The story is different in the production and export of heavy vehicles. Heavy vehicle assembly fell by -4.3% in 2024 (vs. 11.0% growth in 2023). Particularly, in the last quarter, it averaged a decline of -17.0%. In terms of brands (table 7), half of the production corresponded to Freightliner (55%), followed by International (30%), while in cargo vehicles, Mercedes-Benz led with just 1.5% of total heavy vehicles. However, the highest growth was experienced by Dina’s passenger vehicles, which saw an increase of 4.27% compared to the previous year. Finally, heavy vehicle exports ended in negative numbers, falling sharply by -10.2% (vs. 6.4% in 2023). As with production, the declines were more noticeable in the second half of the year, averaging -6.5% in the last quarter of 2024.

Looking ahead, we believe that the entry of new players and increased internal competition will continue to drive domestic sales growth, also benefiting from a price increase dynamic below headline inflation. However, the origin of these new players’ vehicles will be a relevant issue, as an industrial policy imposing tariffs on Chinese-origin vehicles could slow sales growth.

From an international perspective, given the current uncertainty and the possibility of a more complicated trade relationship between Mexico and the United States due to Trump’s stance on promoting the U.S. automotive industry, Mexico could be affected by the imposition of tariffs on the automotive sector. In this sense, the way to avoid a significant long-term decline is for Mexico to align with U.S. needs and requirements. Hence, the recently reiterated interest by Claudia Sheinbaum’s administration in increasing the added value of the automotive chain produced in Mexico and reducing exposure to Chinese inputs.

For 2025, given the greater complexity and uncertainty in the outlook, we expect the sector to continue growing, albeit at a slower pace than last year. New Asian brands will have a significant presence in the market, partly due to their more accessible prices and consumer financing facilities. However, the first measures taken by Donald Trump’s presidency regarding tariffs will be key to defining the automotive sector’s outlook.