EXCLUSIVE: In Search of Establishing in Mexico, Chinese BYD and Geely Compete to Buy Automotive Plant

Archive photo. Visitors observe electric vehicles manufactured by the Chinese automaker BYD during the Indonesia International Motor Show 2026 in Jakarta, Indonesia. February 9, 2026. REUTERS/Willy Kurniawan · Reuters

By Emily Green

Thu, February 12, 2026, 10:18 p.m. GMT+9 6 min read

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By Emily Green

MEXICO CITY, Feb 12 – Two of China’s leading automakers, BYD and Geely, are among the finalists to purchase a Nissan–Mercedes-Benz plant in Mexico, according to a person familiar with the matter, as China seeks to manufacture in a country where U.S. tariffs are causing factory closures and layoffs.

The two finalists emerged from nine companies expressing interest in acquiring the plant, including at least two other major Chinese manufacturers: Chery and Great Wall Motor, according to two sources familiar with the matter. Vietnamese electric vehicle maker VinFast is the third finalist, one person said.

The interest from Chinese manufacturers, not previously reported, marks a significant potential shift in Mexico’s automotive industry. For decades, American, European, and Japanese automakers have dominated the market, mainly building vehicles for the U.S.

Now, Mexican officials face a balancing act. Trump administration tariffs are hurting Mexico’s auto sector, and Chinese investment could create much-needed jobs, but there is concern that Chinese production in Latin America could irritate Washington and jeopardize this year’s US-Mexico-Canada Agreement (USMCA) negotiations.

The U.S. has effectively banned the sale of Chinese-branded vehicles, and President Donald Trump has accused Mexico of providing a backdoor for Chinese products to enter the U.S. market.

BYD, Chery, Great Wall, Geely, VinFast, and Wall did not immediately respond to Reuters on the matter.

BYD and Geely’s manufacturing ambitions in Mexico highlight China’s explosive global automotive growth. BYD’s vehicle sales have increased tenfold since 2020, and Geely’s have doubled. Both companies sold over 4 million vehicles last year, roughly the same as Ford.

Mexico is a key export market for BYD, Geely, and other Chinese manufacturers, which collectively increased their market share from zero in 2020 to around 10% last year, according to auto industry consultancy AutoForecast Solutions. Mexico has about 1.5 million vehicle sales annually.

THE GOVERNMENT SEEKS TO DELAY

While Mexico cannot block the sale of a factory, officials from the Ministry of Economy have discreetly urged state authorities to delay Chinese manufacturers’ investments until trade negotiations with the U.S. are concluded, two government sources said.

U.S. trade barriers are based on national security and economic concerns, a White House spokesperson said. “The issue here is China’s subsidized overcapacity that pushes Chinese companies to flood other markets with excess production,” the spokesperson added.

China’s Ministry of Commerce did not respond to requests for comment.

Last year, Mexico imposed 50% tariffs on Chinese cars and other goods, widely seen as an effort to appease Washington. But these import taxes also incentivize Chinese manufacturers to produce in Mexico.

This is already happening further down the supply chain. In the industrial city of Ramos Arizpe, Shanghai Yongmaotai Automotive Technology is building a new auto parts factory that will employ 600 workers. This coincides with 1,900 layoffs at a General Motors plant producing electric vehicles in the same city, with GM citing weak U.S. demand. U.S. electric vehicle sales have plummeted after Trump’s subsidy reversals.

Mexico’s auto industry heavily depends on the U.S. market. In 2024, U.S. customers bought 2.8 million of the 4 million passenger vehicles produced in Mexico, according to the Mexican Automotive Industry Association (AMIA). But the sector has faced difficulties since March, when Trump imposed a 25% tariff on Mexican-made autos.

After three decades of growth, vehicle exports to the U.S. fell nearly 3% in 2025, according to AMIA. The association’s president, Rogelio Garza, expects an even sharper decline this year if tariffs continue. Mexico lost about 60,000 jobs in the auto industry last year, government data shows.

“We can’t keep going like this,” Garza said. “Right now, it’s cheaper to send cars to the U.S. from Europe and Asia than from Mexico.”

“WE DON’T NEED CARS MADE IN MEXICO”

The Nissan–Mercedes plant in Aguascalientes, central Mexico, is closing for many reasons, with U.S. tariffs being the final blow, industry experts said.

Mercedes, which manufactures the Mercedes-Benz GLB at the plant, is relocating production to Hungary, where it could export cars back to the U.S. with lower tariffs than from Mexico. Mercedes did not specify the reasons for the move or whether tariffs were a factor, only stating that production of the current GLB model is ending.

Nissan, which produced the Infiniti QX50 and QX55 at the plant, is canceling those low-sales models. Nissan said the decision to close the plant reflects “broader strategic changes.” The Japanese manufacturer will also close a second plant outside Mexico City as part of a global restructuring.

Trump claims his tariffs are boosting manufacturing in the U.S. “We don’t need cars made in Mexico,” he said at a Ford plant in January.

However, U.S. government data shows the loss of 17,000 jobs in the auto sector since Trump took office in January 2025. The White House said new factories will take time to build.

MEXICO COULD BENEFIT FROM CHINESE INVESTMENT

Chinese companies see Mexico as a strategic piece to sell their vehicles across Latin America.

The nine automakers interested in the Nissan–Mercedes plant leaned toward hybrid and electric vehicle manufacturers focused on producing for Mexico and Latin America, the Aguascalientes government said, without naming the companies or their origins.

Chinese manufacturers need approval from Beijing for investments in overseas factories. One source familiar with the proposals said China’s Ministry of Commerce is aware of the interest and has not raised objections.

BYD had planned to build a new factory in Mexico but grew tired of the bureaucratic process needed for approval, a government official familiar with the matter said.

The company does not need Mexican government approval to buy the Aguascalientes plant, which opened in 2017. The facility has a capacity of 230,000 vehicles per year and has a pool of skilled workers and transportation infrastructure.

Mexico could benefit from such investments, said business consultant Víctor González, who has advised several Mexican states on attracting Chinese investment.

“Setting politics aside,” he added, “there isn’t a single state in Mexico that wouldn’t be willing and even supportive of Chinese manufacturers investing, producing, and hiring locally.”

(Reporting by Emily Green in Mexico City and China Desk; Edited by Brian Thevenot and Rosalba O’Brien; Spanish editing by Lizbeth Díaz)