Background on the Relevant Person and Context
Guido Vildozo, Senior Manager at S&P Global Mobility, has advised Mexican car dealerships to diversify their auto catalogs by incorporating at least one Chinese brand into their sales platform. This recommendation comes as traditional Western automakers (General Motors, Ford, Volkswagen, Stellantis, and others) have experienced a 15% loss in global volume sales. These losses are attributed to new offers from Asian “tiger” countries, particularly China, which now provide electric vehicle options at competitive costs compared to conventional combustion engine vehicles.
Impact on Mexican Market
Mexico, a significant market for electric vehicle exports in America, offers advanced technology and affordable prices to Mexican consumers. Over the past two decades, traditional automakers have lost approximately 8 to 9 million units, and this pressure will continue with the rise of Chinese brands.
The US tariff on the global automotive industry has caused losses of up to $800 million for a single car manufacturer, prompting them to raise vehicle prices worldwide as a strategy to avoid financial losses. Additionally, rising interest rates will strain automotive financing in the short term, while Chinese car prices remain challenging to match.
Vildozo highlighted that the cost of batteries in China is $52 per kilowatt-hour (kWh), while combustion engine costs outside China range from $60 per kWh. Mexico will impose a 50% tariff on Chinese-origin vehicles starting in January 2026 to level the playing field for local automotive businesses, which currently face subsidized pricing from Chinese companies.
Future Projections
Despite the presence of Chinese vehicles, Vildozo projects that Mexican auto sales will reach 1.4 million units by 2026, with around 200,000 units captured by Chinese brands. This would leave traditional manufacturers (American, European, and Japanese) with a market of approximately 1.1 million vehicles, similar to their size in 2019.
According to an S&P comparison, traditional brands are expected to lose double-digit market share. For instance, Toyota is projected to lose 5% of its international production volume; Volkswagen, 27%; and Stellantis, more than 20% from 2019 to 2026. In contrast, BYD is expected to grow by 969%, Geely by 99%, and Chery (Chirey in Mexico) by 311% during the same period.
Key Questions and Answers
- What is the main recommendation from S&P Global Mobility’s Senior Manager, Guido Vildozo?
Mexican car dealerships should diversify their auto catalogs by including at least one Chinese brand to remain competitive. - Why are traditional Western automakers losing market share?
They’re facing competition from new offers by Asian countries, particularly China, which now provide competitive electric vehicle options. - What impact will the US tariff on the global automotive industry have?
It may cause financial losses for car manufacturers, prompting them to raise vehicle prices worldwide. - What tariff will Mexico impose on Chinese-origin vehicles starting in 2026?
Mexico will impose a 50% tariff on Chinese-origin vehicles starting in January 2026. - What are the projected changes in market share for various automotive brands from 2019 to 2026?
Traditional brands like Toyota, Volkswagen, and Stellantis are expected to lose double-digit market share, while Chinese brands like BYD, Geely, and Chery are projected to see significant growth.
