ALSC Mexico 2024: Investment in nearshoring continues in Mexico’s automotive supply chain

Despite the upcoming Trump Administration potentially raising tariffs on Mexican imports into the US, the majority of delegates at this year’s Automotive Logistics & Supply Chain Mexico conference said they are seeing investments in nearshoring across the automotive supply chain and logistics.

More than three quarters (78%) of the delegates – consisting of experts from automotive OEMs, logistics providers and suppliers – reported that there is current investment in nearshoring, even as doubts about tariffs have arisen.

Around half of the logistics experts (49%) said there is currently “small to moderate investment” in nearshoring, while a further 29% said there is “significant” investment in nearshoring in Mexico.

Of the remaining delegates, 16% said there is little or no investment in nearshoring, while 4% found a small to moderate contraction and 2% found a significant contraction in the trend.

Due in part to this continuing positive trend in nearshoring, most delegates said they expect their company’s volume and revenue in Mexico to increase in 2025 compared to this year – a positive sign for the country’s automotive supply chain in the face of tariff uncertainty.

More than half of attendees (56%) expect their company’s operations to expand by 10% or more, while 15% expect operations to expand less than 10% year-on-year. Almost a quarter (22%) said they think operations will remain at similar levels to this year. Only 6% reported they expect operations to decline by 10% or less, and only 1% expect a decline of more than 10%.

The fact the overwhelming majority of automotive logistics experts in attendance are seeing opportunities for growth in nearshoring is a positive, especially given the fear that nearshoring could halt and investment could stall while OEMs wait to see how the Republicans negotiate the United States-Mexico-Canada free trade agreement (USMCA) up for review in 2026. Mike Wall, executive director, automotive analysis at S&P recently told Automotive Logistics that the “elephant in the room” following the US election would be potential tariffs and the USCMA agreement negotiations having an impact on nearshoring and investment in Mexico. “One thing we’ll be watching very closely is the tariffs that impact Mexico and the broader USMCA arrangement,” he said, adding there could be “huge implications” for the North American automotive supply chain. 

But the picture so far fairly optimistic, especially given the news that Toyota will invest $1.45 billion into its factories in Mexico to renovate its facilities in Tecate, Baja California and Apaseo el Grande, Guanajuato for hybrid production.