GAC will be the first Chinese automaker to start assembly operations in Mexico, as it seeks to circumvent the 50% tariff on Chinese cars while expanding its global presence.

In announcing its plans to build cars in Mexico, the company failed to reveal where in Mexico the manufacturing will take place, or what the investment amount will be. It did say that operations are expected to begin in the second half of this year with the capability of assembling sedans, pickup trucks, SUVs and crossovers. 

The production program will be flexible, according to the GAC announcement, meaning it can include combustion engines, electric vehicles and hybrids. 

Chinese automobiles are a familiar option in the Mexican market but none are manufactured in the country, although some Chinese manufacturers have expressed interest in doing so, including BYD and Greeley.

Increasing the incentive to assemble in this country, Mexico early this year imposed tariffs ranging from 5% to 50% on 1,463 tariff classifications from countries without free trade agreements, with Chinese cars facing the highest rate of 50%. By producing in Mexican territory, the brand will avoid that 50% tariff and reposition itself within the United States-Mexico-Canada agreement, provided it complies with regional rules of origin, a key factor in the face of stricter audits of Chinese inputs.

“This announcement not only marks the beginning of a new operational phase; it also reinforces a broader growth vision in the region,” GAC said in a statement. “This transaction strengthens the company’s structure in Latin America and lays the foundation for future development of production capabilities, research and commercial expansion.”

The company, which started commercial operations in Mexico in the last quarter of 2024, added that the move aims “to meet the demand of the national market, aligned with a long-term, sustained growth strategy.”

Though it has been mum on potential sites, GAC has presumably considered adding its name to the list of manufacturers interested in taking over the shuttered automotive plants in Morelos and Aguascalientes: the Civac factories by Nissan and Compass by Nissan-Mercedes Benz. 

With reports from El Economista