Nissan is preparing for the potential entry of Chinese automakers into North America, with the company’s chairman, Christian Meunier, predicting that Chinese brands could begin building cars in Mexico within the next two to three years.
This move would bring Chinese automakers’ low-cost manufacturing advantage closer to the United States, making it harder for established automakers like Nissan to compete on price.
According to Meunier, Chinese automakers will not remain dependent on exports forever, and once they localize production in North America, the competition will become more intense.
Meunier stated, “It will happen probably in the next two to three years, so we need to be ready,” referring to Chinese automakers setting up production in Mexico.
Chinese brands already have a presence in Latin America, and Mexico offers an established automotive manufacturing base and proximity to the lucrative U.S. market.
Building locally would also help Chinese automakers avoid some of the tariffs that make importing finished vehicles into North America more expensive.
Nissan is concerned about the resulting price war and plans to become more cost-competitive by using some of China’s strengths against Chinese automakers themselves.
The company is expanding exports of China-developed and China-built vehicles into Latin America, including the Frontier Pro plug-in hybrid pickup and the N7 electric sedan.
These vehicles are products of Nissan’s partnership with Dongfeng, and the company has previously discussed using its Chinese production operations as an export hub.
Notably, Nissan has set an initial target of exporting around 100,000 vehicles from China and aims to reach 300,000 annually in the long term, demonstrating its commitment to leveraging China’s manufacturing capabilities.
While Chinese-built cars are not expected to flood American dealerships immediately, Meunier expects Chinese brands to eventually enter the U.S. market, potentially within five years.
Building in Mexico would give Chinese automakers a major foothold in North America, and evidence already shows that Chinese manufacturing can reach the U.S. market indirectly through established global brands, such as the Buick Envision, Volvo S90, Polestar 2, and Lincoln Nautilus.
The scenario Nissan is preparing for is one where Chinese companies establish factories just south of the U.S. border, and the company is taking steps to cut costs, increase localization, and develop vehicles in China that can be sold elsewhere.
Moreover, the trend of Chinese automakers gaining market share is not unique to North America, as they have already made significant inroads in Europe, where they held a 10.4 percent share of the market through August this year, a figure that would have been unthinkable just a decade ago, and have even been successful in selling Chinese-built vehicles in the U.S. market through established global brands.