I note in the recent NIKKEI ASIA article Trump tariffs shake Asian carmakers’ Mexico production strategies: Policy could backfire on GM and Ford while also harming Nissan, Mazda, and Kia.
South Korea’s Kia, an affiliate of HyundaiMotor Group, said during its earnings call that if the tariffs go ahead, the company would have to consider a new destination for the 120,000 K4 sedans it planned to make in 2025 at its Mexican factory then ship to the U.S.
Don Southerton, a consultant to Hyundai, Samsung, and other South Korean companies operating in the U.S., said his clients and their suppliers have been growing increasingly concerned about the potential impact of 25% tariffs on imports from Mexico.
He added that although the additional costs will burden Kia, they noted that “the tariff policy is not at a level that would undermine Kia’s system.”
We’ll see… Feb. 1, 2025, is just around the corner.
By the way…
I’d add that when most OEMs entered the Mexican market under the North American Free Trade Agreement (replaced by the United States-Mexico-Canada Agreement (USMCA) in 2020), it opened the doors for the flow of goods tariff-free between Canada, Mexico, and the U.S.
That said, before the treaties, substantial goods were produced by Maquiladoras, factories in Mexico that assemble, manufacture, or package products for export to the United States or other countries.
Interestingly, today’s Hyundai Translead was one of the 1st Maquiladoras.
LA Times noted in 1989.
Hyundai Will Build Container Plant in Tijuana : Maquiladoras: South Korean company is the second heavy-industry firm to announce plans in Baja in the wake of relaxed Mexican guidelines.
By the way, cost savings and lower labor costs have not been the sole drivers of carmakers building plants in Mexico.
Mexican government regulations force car companies to assemble cars in Mexico using local and imported components. Thus, all the major car brands have plants in Mexico. I
In other words, for an OEM like the Hyundai Motor Group and KIA to sell cars in Mexico, it needs to also manufacture cars in Mexico.
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