BYD and Geely vie for Nissan–Mercedes Mexico plant amid tariff pressures

Two of China’s largest automakers, BYD and Geely, are among the finalists seeking to acquire a Nissan–Mercedes-Benz manufacturing plant in Mexico, according to a report by Reuters.

The factory, located in Aguascalientes in central Mexico, is being shuttered by Nissan and Mercedes-Benz as U.S. tariffs and broader restructuring efforts weigh on the country’s auto sector.

Chinese automakers among finalists

BYD and Geely emerged as finalists from a field of nine interested companies. Other Chinese manufacturers, including Chery and Great Wall Motor, had also expressed interest, alongside Vietnamese electric vehicle maker VinFast.

The potential acquisition underscores the rapid global expansion of China’s auto industry. BYD’s vehicle sales have increased ten-fold since 2020, while Geely’s have doubled. Both companies sold more than 4 million vehicles last year, roughly matching output levels of established Western rivals.

Strategic foothold in Mexico

Mexico has become an increasingly important export market for Chinese brands. According to consultancy estimates, Chinese automakers have grown their market share in Mexico from virtually zero in 2020 to around 10% last year, in a market that sees roughly 1.5 million annual vehicle sales.

For Beijing’s carmakers, securing production capacity in Mexico would provide a strategic foothold in Latin America. However, the move comes amid political sensitivities.

The United States has effectively barred Chinese-branded vehicles from its market, and President Donald Trump has accused Mexico of acting as a “back door” for Chinese goods. Mexico itself imposed 50% tariffs on Chinese cars last year, a move widely seen as an effort to ease tensions with Washington. At the same time, those import duties create incentives for Chinese firms to manufacture locally.

Mexican economy ministry officials have privately urged state authorities to delay Chinese automotive investments until ongoing U.S. trade negotiations conclude.

Plant capacity and sector strain

The Aguascalientes facility, opened in 2017, has capacity to build up to 230,000 vehicles annually and comes with established logistics infrastructure and a skilled workforce. Mercedes-Benz is moving production of the GLB to Hungary, while Nissan is discontinuing the Infiniti models previously built at the site as part of broader restructuring.

Mexico’s auto industry has come under increasing strain since the imposition of 25% U.S. tariffs on Mexican-made vehicles in 2025. Reuters cited industry data showing that U.S. buyers purchased 2.8 million of the 4 million passenger vehicles produced in Mexico in 2024. Exports to the U.S. fell nearly 3% in 2025, with further declines expected if tariffs persist.

Against that backdrop, Chinese investment could offer job creation in a sector that lost around 60,000 positions last year, government data shows. As one consultant told Reuters, despite political considerations, Mexican states are broadly open to attracting Chinese automakers willing to manufacture and hire locally.

The bidding process highlights a pivotal moment for Mexico’s automotive landscape, long dominated by U.S., European and Japanese manufacturers. If successful, BYD or Geely’s entry via the Aguascalientes plant would mark a significant shift in the country’s industrial alignment.