The potential entry of Chinese manufacturers into the Nissan and Mercedes-Benz plant in Aguascalientes has become one of the most closely watched developments in the global automotive industry. The COMPAS complex, with a capacity of hundreds of thousands of vehicles per year, is in the process of closing and has attracted the interest of several Asian groups, with BYD and Geely leading the race.
Meanwhile, trade tensions between the United States, Mexico, and China are reshaping where and how cars are manufactured for markets like Europe and Latin America. What happens with this Mexican plant not only affects local employment but could also influence the future strategy of Chinese brands as they expand westward.
BYD and Geely are the favorites in the bidding for the COMPAS plant…
Of the nine companies that expressed interest in the Nissan-Mercedes plant in Aguascalientes, three have advanced to the final round. These are the Chinese companies BYD and Geely , and the Vietnamese company VinFast , which specializes in electric vehicles. Other Chinese manufacturers, such as Chery and Great Wall Motor , were also among the initial candidates but ultimately did not make it to the decisive stage.
The facility, known as Cooperation Manufacturing Plant Aguascalientes (COMPAS) , originated as a joint venture between Nissan and Daimler (Mercedes-Benz). After years of operating as a plant for premium vehicles and compact SUVs, the complex is slated to close its doors in May 2026 , paving the way for its complete sale to a new operator.
According to various sources close to the process, BYD and Geely are the frontrunners to acquire the asset, although neither the Asian brands nor the selling companies have made the details of the transaction public. For now, the amount of the potential transaction and the exact terms of the purchase are unknown, beyond the fact that it would ensure the continued operation of the complex as an automotive manufacturing hub.
What is manufactured (and what will cease to be manufactured) in Aguascalientes…
The COMPAS plant has so far produced high-end models and compact SUVs primarily for export. Its production lines have included the Infiniti QX50 and QX55 , Nissan's luxury division, as well as the Mercedes-Benz GLB , a C-segment crossover SUV. This specialization reflects the alliance's initial objective: to supply the US market primarily with higher value-added models.
However, changing market trends and US tariff pressures have eroded the project's viability. Production of Infiniti models was scheduled to end in November 2025 , and GLB production is slated to cease in May 2026 , the date on which the plant is expected to effectively close under its current operating model.
The center, inaugurated in 2016-2017 according to various sources, has a capacity of approximately 230.000 vehicles per year , an established logistics network, and a highly skilled workforce . It is precisely this combination of installed capacity, trained personnel, and infrastructure that makes the acquisition so attractive to potential buyers.
Tariffs and industrial restructuring: the background of the business…
The context of this bidding war cannot be understood without considering Washington's protectionist shift. The United States has imposed very high tariffs, close to 100% , on cars of Chinese origin and has effectively blocked the sale of vehicles from Chinese brands within its borders . Furthermore, the Trump administration has imposed a 25% tariff on vehicles manufactured in Mexico , which has abruptly increased the cost of exporting from the neighboring country.
The Mexican automotive industry, highly integrated with the U.S. sector, has felt the blow. In 2024, the United States purchased 2,8 million of the 4 million vehicles produced in Mexico , but the implementation of the new tariffs has changed the picture. After three decades of continuous growth, Mexican vehicle exports to the U.S. fell by almost 3% in 2025 , and the sector lost around 60.000 jobs in a single year, according to data from the Mexican Automotive Industry Association (AMIA) and the government itself.
Even the US labor market has not benefited to the extent expected. Despite Trump's "reindustrialization" rhetoric, the US auto industry has shed some 17.000 jobs since 2025, partly due to the slowdown in demand for electric vehicles following the withdrawal of federal subsidies. This slowdown has also affected plants in Mexico, with cases like General Motors in Ramos Arizpe , which announced 1.900 layoffs at its electric vehicle factory while, in the same city, a Chinese auto parts company was building a new complex with 600 jobs.
USMCA and Mexico's tariff strategy against China…
The Mexican government has hardened its trade stance by increasing tariffs on Chinese imports, with levies reaching up to 50%. This measure affects strategic sectors such as steel, textiles, and electric vehicles, aiming to protect domestic industry from Asia's overcapacity. However, this tariff barrier paradoxically acts as an incentive for Asian firms to relocate their plants to Mexico, transforming former exporters into local manufacturers to evade the high taxes in effect since January 2026.
Claudia Sheinbaum's administration faces the challenge of balancing pressure from Washington with the influx of foreign direct investment from giants like BYD and Geely. While the United States closely monitors the review of the USMCA , Mexico is attempting to manage the timing of sales of strategic assets, such as the COMPAS plant in Aguascalientes, to avoid diplomatic friction. The goal is to project an image of alignment with its North American partners while maintaining the flow of Chinese capital necessary to boost the regional economy and strengthen the supply chain.
Despite the tensions, trade diplomacy between Mexico and Beijing seeks to maintain open channels for negotiating the bilateral trade relationship without jeopardizing previous agreements. The new tariffs on more than 1.400 items are seen as a political gesture toward the White House, but the industrial reality shows increasing integration. The creation of new auto parts plants in Mexico confirms that the country remains the preferred gateway to the North American market, forcing the Mexican government to carefully manage this complex geopolitical triangle between the two global powers.
Growth of Chinese brands and Mexico's importance as a market…
BYD and Geely have solidified Mexico as a strategic pillar in their global expansion, achieving sales figures that now rival those of well-known giants. Since 2020, these companies have experienced exponential growth, leveraging their enormous production capacity to position themselves in key market segments. This progress is not merely tactical, but rather a response to the need to offload excess capacity from their plants in Asia, allowing them to maintain competitive prices despite international economic fluctuations.
In the domestic market, Chinese brands have gone from a marginal presence to controlling a market share of nearly 11,4% by early 2026. Firms like MG , Chirey, and JAC have strengthened their sales networks, focusing on selling hybrid and electric vehicles that appeal to today's consumers. Although registrations saw slight variations over the past year, the overall trend is one of unstoppable growth, demonstrating remarkable resilience in the face of stricter tariff policies and competition from North American firms.
The success of these manufacturers lies in their ability to absorb operating costs thanks to their large industrial scale and mastery of advanced automotive technology . Industry analysts point out that these companies' strategy focuses on dominating the SUV segment, where the price-to-performance ratio is unbeatable for many local buyers. In this way, the Chinese car industry continues to gain ground in the Mexican vehicle market, profoundly transforming consumption patterns and the current structure of regional trade.
Why the Mexican Nissan and Mercedes-Benz plants also export to Europe…
For a European reader, this dispute over the Aguascalientes plant may seem distant, but the reconfiguration of production in North America has direct ramifications . On the one hand, Mercedes-Benz is moving GLB production to Hungary , from where it can supply various markets, including Europe, and ship vehicles to the US with a potentially more favorable tariff structure than from Mexico.
On the other hand, if BYD or Geely transform COMPAS into a manufacturing hub for electric and hybrid vehicles for Latin America , they could free up capacity at their plants in China or Eastern Europe to allocate to other markets, including Europe. In practice, this could mean a more aggressive offering of Chinese electric models in Europe , supported by the cost efficiencies they achieve in their global manufacturing network. Supplying different markets from Mexico is already a reality for some brands.
Furthermore, the progress of the USMCA negotiations and US trade policy will serve as a barometer for the economic relationship between the European Union and China. If Washington further tightens its stance on Chinese vehicles , some of that pressure is likely to spill over into Brussels, which has already launched investigations into possible state subsidies for Chinese electric vehicle manufacturers. European capitals will closely monitor how Mexico channels and regulates Chinese investment within its borders.
