Neither Crises Nor Policies Prevent Mexico from Attracting Investment

Despite the economic and political challenges Mexico faces due to its northern neighbor’s policies, the country continues to attract significant foreign investments.

CIE Automotive is a multinational company that makes car parts. It is based in Bilbao. The company recently announced it will invest €100 million. This money will go towards building a new factory in northern Mexico.

The construction of this plant has already begun, and it is expected to be operating at full capacity by next year. With this investment, the company boosts its presence in the country. It already has twelve factories, mostly in Celaya (Guanajuato) and Puebla.

This move shows Mexico’s strength as an important player in car manufacturing. It can keep growing even with outside challenges.

Mexico’s Strategic Importance in Automotive Manufacturing

Currently, North America accounts for more than 31% of CIE Automotive’s revenues, including the turnover from its five centers in the United States. The automotive sector is a key part of the Mexican economy. Even with challenges from U.S. protectionist policies, auto parts manufacturers in Mexico are still doing well.

Mexico has low labor costs, a skilled workforce, and trade agreements like the USMCA. These factors make it a great place for companies to invest and boost their automotive manufacturing.

The U.S. government wants to bring production back home. This has worried global suppliers. However, big auto parts makers know that Mexico's location and low costs are hard to match.

American automotive brands still benefit from sourcing components from Mexico, ensuring sector automotive stability across the region. CIE’s latest investment underscores the country’s long-term potential as a hub for automotive manufacturing.

Expansions and Upcoming Investments in Mexico

So far in 2025, several companies have announced significant investments in Mexico, highlighting the country's attractiveness for foreign direct investment. Below are some of the major companies that have confirmed their investment plans:

• Amazon:

The e-commerce giant Amazon has confirmed a $6 billion investment to strengthen its network and digital capacity in Mexico. This investment adds to the previously announced $5 billion for the construction of a data center region in Querétaro, which is expected to begin operations in the early months of 2025.

• Constellation Brands:

The U.S. company Constellation Brands, known for producing and marketing alcoholic beverages, announced a $1.6 billion investment in Veracruz to expand its production capacity in the country.

• Foxconn:

Taiwanese company Foxconn will invest over $241 million in the construction of a superchip factory in Mexico. These chips will be supplied to Nvidia and aim to strengthen the region’s technology supply chain.

• Royal Caribbean Group:

Cruise line company Royal Caribbean will invest $1.5 billion in developing a tourism hub in Mahahual, Quintana Roo. This project will be linked to the Maya Train and seeks to boost tourism development in southeastern Mexico.

• Woodside Energy and Petróleos Mexicanos (Pemex):

In a joint collaboration, Woodside Energy and Pemex will invest $10.4 billion in developing a fossil fuel deposit. This project aims to strengthen the country’s energy infrastructure and ensure fuel supply.

• Mexico Pacific:

Mexico Pacific has announced a $15 billion investment to develop a liquefied natural gas terminal in Puerto Libertad, Sonora. The project will import natural gas from the United States, liquefy it, and primarily export it to Asian markets.

Strengthening Mexico’s Automotive Industry

CIE’s new factory in Mexico will significantly boost its automotive manufacturing capacity, catering to both local and international clients. As the demand for high-quality and technologically advanced auto parts manufacturers grows, this expansion aligns with the evolving needs of the global automotive sector.

The new facility will implement cutting-edge technology and sustainable production processes, ensuring efficiency and environmental responsibility. This is particularly important as sustainability becomes a key factor in sector automotive decision-making worldwide. CIE Automotive is setting a new standard in car manufacturing in Mexico. They use automation, AI-driven production lines, and better logistics.

Challenges in the European Market

CIE’s growth contrasts with the situation in Europe, where vehicle production fell by nearly 7% in 2024. Analysts predict consolidation in the automotive sector due to excess installed capacity. Added to this is the impact of the European Union's regulatory measures to reduce pollutant emissions, which have been criticized by the group’s chairman, Antón Pradera.

Despite this context, CIE continues to invest in innovation and adaptation to new market demands. The company has implemented digitalization and automation strategies in its European factories to maintain competitiveness and improve production efficiency.

Investment Plan and Financial Goals

For the 2021-2025 period, CIE Automotive has outlined a €1 billion investment plan focused on both organic growth and acquisitions. The company plans to generate €500 million in cash each year. It also wants to keep a profit margin of 19% on sales (EBITDA).

In the last five years, the company made strategic sales. One example is the sale of its forging division in Germany. This sale brought in a profit of €12.7 million.

Mexico’s Future as an Investment Hub

While external factors, including economic shifts and political challenges, create uncertainty, Mexico remains a top destination for foreign direct investment in automotive manufacturing. Companies like CIE Automotive recognize the country’s resilience, robust infrastructure, and skilled workforce as crucial factors for success. By continuing to invest in Mexico, leading auto parts manufacturers solidify its position as a cornerstone of the automotive sector.

 With this new investment, CIE Automotive reaffirms its commitment to the region and its global expansion strategy, betting on growing markets and strengthening its presence in the international sector automotive. The company plans to keep looking for opportunities in Latin America and Asia. The automotive sector is growing in these regions. This will help the company strengthen its role in making parts for the future of mobility.