Mexico’s automotive industry is entering a pivotal phase as global manufacturers rethink supply chains, tariffs reshape trade flows and the transition to electrification gathers pace. While uncertainty over evolving technologies and geo-politics continues to weigh on investment decisions, the country is leveraging its deep North American integration, competitive manufacturing base and expanding tyre sector to reinforce its position as a global auto parts powerhouse. Industry leaders now see fresh opportunities emerging not only from US and Canada but also from Latin America, Europe and India.

Mexico’s automotive parts industry is entering a new growth cycle powered by deep North American integration, expanding trade agreements, low-cost manufacturing and a rapidly evolving tyre sector that is adapting to electrification, hybrid vehicles and changing consumer preferences.

While global uncertainty over tariffs and the pace of electric vehicle (EV) adoption continues to cloud investment decisions, Executive President of Industria Nacional de Autopartes (INA) Francisco N. Gonzalez Díaz believes Mexico’s mature manufacturing ecosystem, skilled workforce and strategic location position it for another decade of expansion, one that could also strengthen ties with emerging automotive partners such as India.

“The country’s automotive supply chain has transformed dramatically since the North American Free Trade Agreement (NAFTA) came into force in 1994. Today, Mexico is the world’s fourth-largest producer of automotive parts and one of the most integrated manufacturing hubs in North America, exporting components and tyres primarily to United States and Canada while increasingly targeting Latin America and Europe,” said Diaz during an exclusive interaction with Tyre Trends.

He added, “The tyre sector is very important in Mexico. Over the past few years, we’ve seen major investments from companies such as Michelin and Pirelli and we also have Indian tyre manufacturers operating in Mexico. The industry is growing in both passenger and commercial vehicles while introducing technologies that reduce pollution and improve efficiency.”

Tyres produced in Mexico are exported not only across North America but also to Latin America and other international markets, making the sector an important contributor to the country’s automotive exports.

CHANGING LANDSCAPE

Although the Mexican tyre industry was once dominated by domestic manufacturers, the landscape has changed significantly. Companies such as Tornel were acquired by international firms as global players expanded their manufacturing footprint in the country.

Díaz noted that these acquisitions accelerated technology transfer and modernised production capabilities, effectively integrating local manufacturers into global supply chains.

Yet he believes the next generation of Mexican tyre companies may emerge through electrification.

According to him, two Mexican start-ups are currently developing tyres specifically for electric vehicles. Unlike conventional passenger-car tyres, EV tyres must withstand significantly greater vehicle weight while maintaining the dimensions and ride characteristics expected of passenger vehicles.

“These aren’t start-ups with four or five people,” he said. “They already employ close to 100 people and are developing tyres for one of the largest electric vehicle companies in United States.”

Unlike many markets where fully electric vehicles dominate industry discussions, Mexico’s transition is being led by hybrids.

With charging infrastructure still concentrated in homes, offices and selected commercial locations, plug-in hybrid vehicles are proving more practical than battery electric vehicles.

While EV sales are growing at roughly 30 percent annually, Díaz said they still represent a relatively small portion of the overall market.

Hybrid vehicles, however, are becoming the dominant technology, reshaping demand across the automotive supply chain including tyres.

CONSUMER PREFERENCES

Consumer preferences are also shifting in other ways. SUVs continue to gain market share across the Americas, while pickups remain popular throughout North America. Small passenger cars continue to sell primarily within Mexico but are growing more slowly than larger vehicles. At the same time, manufacturers are producing larger vehicles equipped with smaller engines as hybrid powertrains become more common.

Asian automakers are another defining trend. “Chinese, Japanese and Korean brands now account for the largest share of new vehicle sales in Mexico, reflecting changing consumer preferences and increasing regional competition,” said Diaz.

Climate is also influencing tyre demand. More intense rainy seasons are driving growing adoption of all-season tyres, which require more sophisticated compounds and engineering than conventional tyres.

“As weather patterns become more extreme, all-season tyres have become an increasingly important business for the tyre industry,” Díaz said.

EXPORTS LEAD

Mexico’s automotive success, however, remains closely tied to exports. Approximately 90 percent of the country’s automotive production is destined for United States and Canada, creating what Díaz describes as a single integrated North American manufacturing market rather than three independent national industries.

“Vehicle components frequently cross borders multiple times before final assembly. While tyres generally move only once or twice, other automotive components may cross the US-Mexico border as many as seven times during production,” he noted.

This integration is reinforced by United States-Mexico-Canada Agreement rules requiring 75 percent regional value content, encouraging manufacturers to source components within North America.

While Mexico’s dependence on exports often raises questions about vulnerability to geo-political tensions, Díaz argues the country’s manufacturing model resembles those of Germany and South Korea.

Instead of viewing exports as a weakness, he sees them as Mexico’s greatest competitive advantage.

MANUFACTURING APPEAL

The country’s manufacturing appeal extends well beyond geography. Mexico enjoys free trade agreements with markets throughout Latin America and is also a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), giving manufacturers tariff-free or preferential access to dozens of international markets.

The country also accounts for roughly 52 percent of Latin America’s advanced manufacturing capacity, making it the region’s undisputed industrial leader.

Equally important is the ecosystem surrounding automotive production. Mexico offers experienced engineers, skilled technicians, established suppliers, mature logistics networks and decades of manufacturing expertise.

“You don’t have to build an industry from scratch,” Díaz said. “The suppliers, knowledge, logistics and the customers are already here.”

The country’s position as the world’s largest exporter of trucks and a production hub for passenger vehicles including BMW models further strengthens domestic demand for both commercial and passenger vehicle tyres.

Unlike emerging manufacturing destinations that may offer inexpensive labour but lack industrial capabilities, Mexico already possesses the specialised workforce and supply chains necessary to support complex automotive production.

CERTAINTY IN UNCERTAINTY

Despite uncertainty surrounding global trade, investment enquiries continue. Some manufacturers have already secured land for expansion, while others remain cautious as they monitor evolving trade policies.

According to Díaz, around 10 to 12 Indian companies are currently exploring investments in Mexico to establish tier-II and tier-III automotive component operations serving North America.

The interest reflects Mexico’s continued attractiveness even after renewed tariff discussions under the Trump administration.

When United States introduced new tariffs shortly after President Donald Trump’s return to office, Mexico initially appeared vulnerable. However, automotive components that complied with USMCA rules quickly regained tariff-free access.

“The direct impact on Mexican auto parts has been minimal,” Díaz said.

Instead, tariff-related costs have largely been absorbed by vehicle manufacturers rather than component suppliers.

Indirect effects have emerged through higher prices for steel, aluminium and other raw materials, prompting manufacturers to reconsider sourcing strategies, particularly for North American-produced steel.

Even so, Díaz believes the overall trading framework continues to function effectively.

LOCAL ADVANTAGES

Mexico’s manufacturing competitiveness is reinforced by strong local sourcing. On average, around 85 percent of tyre materials and related inputs are sourced domestically, with only about 15 percent imported, although specialised products can require significantly higher import content.

Tyres themselves account for approximately 8–9 percent of Mexico’s automotive components industry by value. Efficient logistics further enhance competitiveness.

Rail remains the preferred mode of transport for most automotive exports because production schedules are planned months in advance. Trucks handle regional distribution, while shipping and air freight are used only when necessary.

Energy costs represent another important advantage. Abundant natural gas from neighbouring Texas has helped keep electricity prices among the lowest globally, while Mexico also possesses substantial solar and wind resources.

The remaining challenge lies in expanding transmission infrastructure so electricity generated in one region can be distributed more efficiently across the country.

Manufacturing costs, meanwhile, continue to rise, but so does productivity. Mexico is no longer the ultra-low-cost manufacturing destination it was in the 1970s. However, Díaz said wage growth is increasingly being matched by productivity gains.

Citing projections from the OECD and the Economic Commission for Latin America and the Caribbean (ECLAC), he expects productivity to continue improving over the next five years, allowing higher wages without significantly eroding industrial competitiveness.

HURDLES IN FRAY

The industry’s biggest challenge today is uncertainty rather than costs.

Rapid policy shifts surrounding electric vehicles, changes to the US Inflation Reduction Act, Europe’s evolving emissions regulations and emerging hydrogen technologies are forcing manufacturers to invest simultaneously in internal combustion engine and EV production.

Companies must finance parallel production lines despite demand remaining difficult to predict. “It’s a significant capital expenditure,” Díaz said. “But we know the future is coming, so we have to be ready.”

Mexico’s tyre recycling sector remains comparatively underdeveloped.

Less than 5 percent of end-of-life tyres are processed domestically with most used tyres exported to United States, where larger recycling infrastructure already exists. Domestic recycling operations remain small and largely artisanal.

On policy, Díaz said Mexico currently has no immediate plans comparable to India’s ethanol blending programme, although regulatory changes can be implemented quickly when necessary.

Trade policy, however, continues to encourage localisation. “Imported vehicles that fail to meet Mexican content requirements face tariffs, incentivising manufacturers including motorcycle producers from India to incorporate locally produced components,” said Diaz.

He noted that Mexican suppliers now provide roughly 90 percent of the components used in motorcycles assembled in the country, compared with only about 2 percent when localisation efforts first began.

OPTIMISTIC TURNS AHEAD

Looking ahead, INA expects Mexico to deepen its integration not only within North America but also across Latin America and Europe.

The association believes Mexico’s share of the Mercosur automotive components market could rise from roughly 2 percent today to as much as 10–15 percent over the next five years as manufacturers increasingly seek competitive production bases.

At the same time, European companies facing rising costs and geopolitical uncertainty are shifting portions of their manufacturing footprint to Mexico to serve markets on both sides of the Atlantic.

India will also play a growing role in that strategy.

Rather than simply importing or exporting products, Díaz envisions deeper industrial partnerships extending into third-country markets. “Our job is not to wait and see,” he said. “Our job is to strengthen the relationship.”

For INA, the long-term opportunity extends beyond bilateral trade.

As a member of the G7 association of the world’s seven largest automotive parts-producing countries, Mexico is positioning itself not merely as a manufacturing destination but as a strategic partner helping shape the future of the global automotive supply chain.

ATIRE, a leading Sri Lankan Solid tyre maker, has appointed Thierry Miche as director of OEM and product, effective September 2026, bringing more than 25 years of experience in the global tyre and mobility industry to the role.

At ATIRE, Miche will lead the company's OEM and product activities, focusing on portfolio development, OEM relationships and expansion into new technical and commercial markets globally.

Miche joins from Michelin, where he spent 26 years in senior product and operational leadership positions, including roles at Solideal and Camso before their integration into the French group.

His most recent position was product Management Director for Beyond Road, with global strategic and operational responsibility for the product portfolio. He led teams across Belgium, Canada, France and the US, working with research and development, industrialisation, original equipment manufacturer (OEM) and aftermarket sales, and supply chain functions.

Previously, Miche was Product Line Executive Director For material handling, overseeing the global product platform and holding full profit and loss responsibility for three manufacturing sites in Belgium, Germany and the US. He also led global research and development teams in Belgium and Sri Lanka.

His career has spanned product management and engineering, technical support, warranty management, quality assurance and systems. The experience covers the development and delivery of products across engineering, industrialisation, validation, sales and supply chain operations.

ZC Rubber, China’s largest tyre maker, is running 18 AI agents across its Hangzhou 5G plant. It insists the goal is smarter manufacturing, not emptier factory floors.

Walk into the industrial conversation about automation these days and ‘lights-out’ production tends to come up within minutes: factories with no people, no lighting and machines working in the dark. However, ZC Rubber, the Hangzhou-based group that ranks among the world’s top nine tyre companies, would like to correct that impression before it takes hold.

“We see this as a 5G Smart Factory, or Future Factory V2.0, rather than a ‘dark factory’. The goal is intelligent manufacturing, not simply removing people from the production process,” the company said in an interview.

That is a notable position from a company that has just put 18 AI agents to work across its production chain and reports defect rates well under half those of its earlier operations. It is also a considered one, and the details explain a good deal about how the world’s largest tyre market is approaching the factory of the future.

PEOPLE AT THE EXCEPTIONS

ZC Rubber’s division of labour is simple. Automation, AI and real-time data are steadily taking over what the company calls ‘repetitive and highly standardised operations.’ Its people are being moved towards engineering, process management, quality assurance and the handling of exceptions, meaning the unusual problems that no model has seen before.

“We will continue to increase automation, but fully unmanned production is not the goal,” ZC Rubber said. “It is about combining intelligent systems with human expertise.”

The same logic applies to the future. Asked whether lights-out production is on the roadmap, ZC Rubber was clear. “We do not see fully lights-out production as a goal in itself. Technology will be introduced where it brings clear improvements in quality, efficiency, safety and sustainability,” it said.

EIGHTEEN AGENTS, ONE PRODUCTION CHAIN

The scale of the AI deployment is considerable. Since June 2025, ZC Rubber has introduced 18 AI agents across the full production chain. Their use ranges from AI-assisted formulation and virtual simulation to equipment maintenance, production scheduling and quality control. According to the company, they have helped shorten tyre development cycles by 50 percent and lifted production efficiency by 50 percent.

Where does the value come from? Not from any single stage, the company suggests. “The biggest value comes from using AI to analyse production data, optimise process parameters and support faster decision-making across the manufacturing process,” it said. ZC Rubber does not currently publish a stage-by-stage breakdown of the gains.

INSPECTION AND THE DEFECT RATE

Quality control is where the company’s numbers are most striking. Its latest AI-based visual inspection systems, it says, can achieve a defect detection rate of close to 100 percent, improving both the speed and the consistency of inspection. That matters most in high-volume passenger car radial (PCR) output, where human inspectors face the twin problems of fatigue and sheer throughput.

Zooming out, the company says AI and digital quality control across its smart manufacturing system have cut its product defect rate from 1.2 percent to 0.5 percent.

HOW THE SYSTEMS TALK TO EACH OTHER

“Thousands of sensors collect production data in real time, while 5G connects equipment, quality inspection and logistics systems,” the company said. The APS+MES system pulls production, quality and logistics information into one place ‘so operations can be monitored and adjusted quickly’. AI and big data analytics then help staff spot problems and make faster production decisions.

AN EARLIER SET OF NUMBERS, UPDATED

ZC Rubber’s earlier claims of a 15 percent efficiency gain, up to 40 percent lower defect rates and a 5 percent cut in energy use make one notice that the latest figures are considerably better. The company is candid about why. “Those figures reflect an earlier stage of our smart factory development,” it said.

The current numbers, for the 5G Smart Factory, are a 50 percent improvement in production efficiency, defect rates down from 1.2 percent to 0.5 percent and a 10 percent reduction in overall energy consumption.

As for which technology deserves the credit, ZC Rubber declines to rank them. “We do not break down the improvement by individual technology,” it said, naming instead the key components: AI-based process control, automated inspection, intelligent logistics, APS+MES production management and data-driven quality control.

ENERGY, MEASURED VALVE BY VALVE

The energy figure is worth a closer look, because it comes from a fairly granular system. ZC Rubber’s energy management combines 5G, IoT, big data, AI and digital-twin technologies. Smart sensors, smart meters and smart valves feed real-time data into a central energy platform, while AI supports analysis and operational optimisation.

The division of labour among the technologies is neat. “5G provides the connectivity, while AI, big data and digital twins help turn the data into better energy-management decisions,” the company said.

TWO PLATFORMS AND A DIFFERENT STARTING POINT

The manufacturing story is inseparable from the development story. ZC Rubber runs two proprietary technology platforms: the X-Tech System, primarily for truck and bus radial (TBR) tyres, and the Phecda Tech System, primarily for PCR tyres. Each integrates compound formulation, tyre structure, process engineering, simulation, testing and intelligent manufacturing within a single development framework.

Their defining feature is what the company calls the Forward-development Approach. Traditional development, it explains, “often starts from an existing product and improves it through repeated design and testing cycles”. ZC Rubber starts elsewhere: with the target performance, whether that is vehicle characteristics, duty cycle, climate, road conditions or customer requirements. The compound, tyre structure and manufacturing process are then built around those targets. “This shifts the workflow from repeated iteration to a more integrated, target-driven development process,” the company said.

That, it argues, is where the halving of development time comes from. The 50 percent reduction reflects ‘a more integrated digital development process’, combining engineering expertise with simulation, AI-assisted tools and closer links between R&D, testing and manufacturing. AI lets engineers evaluate more design options against defined performance targets, and virtual simulation cuts out unnecessary physical iterations.

How tightly these platforms are wired into live production data has not been shared publicly. X-Tech and Phecda, the company said, connect R&D, manufacturing and validation within an integrated development process, but the detailed real-time data architecture behind them ‘is not something we currently disclose publicly’.

Henry Shen, ZC Rubber’s Senior Vice President, has made the wider point in the context of the group’s recent State recognition. “Our objective is not simply to develop an individual material, tread pattern or manufacturing process,” he said. “X-Tech and Phecda are complete development systems that connect user requirements with simulation, materials, tyre engineering, manufacturing and validation.”

THE STATE PRIZE

That recognition is significant. ZC Rubber, together with Harbin Institute of Technology, has been awarded the Second Prize of China’s State Science and Technology Progress Award for a project titled ‘Key Technologies and Green Intelligent Manufacturing of High-Performance Tires’. It is one of the country’s highest state-level honours for scientific and technological innovation, and ZC Rubber says it is the only Chinese tyre manufacturer in the past decade to win it at the Second Prize level or above.

The company backs the claim with spending. In 2025, it invested around RMB 1.54 billion (approximately USD 226 million in R&D, equal to 3.43 percent of annual revenue, according to its annual report. The award, it says, recognises technologies that have ‘progressed beyond laboratory research into industrial application’.

GLOBAL FOOTPRINT

ZC Rubber has built a truly global footprint, combining a strong manufacturing base in China with an expanding network of operations across Europe, the Americas, Southeast Asia and beyond. In China, the company operates through multiple sites, including its headquartered in Hangzhou and facilities in Tianjin, Chaoyang, Jiande, Qingquan, Yonggu, Anji and Jintan, supported by dedicated units for recycling technology and automotive aftermarket services in Hangzhou.

Beyond China, ZC Rubber has established a European presence through ZC Rubber Europe GmbH and its Europe Technical Center, alongside ZC Rubber America Inc. in the United States, ZC Rubber Brazil IMP EXP LTDA in South America and ZC Rubber Thailand Co. Ltd. and PT. Matahari Tire Indonesia (MTI) in Southeast Asia.

The company is also preparing for further expansion, with new projects under development in Vietnam and Mexico (Marea Tire de Mexico, S.A. de C.V.) and a feasibility study underway in Egypt. Together, these locations allow ZC Rubber to serve customers closer to their markets, strengthen supply chain resilience and combine local insight with global technical expertise.

CUSTOMISATION WITHOUT THE PENALTY

The forward-development model has a commercial payoff: tyres tailored to where and how they will be used. Asked whether the platforms allow genuine mass customisation, including regional climates and EV-specific requirements, ZC Rubber answered ‘to a significant degree’.

“X-Tech and Phecda allow us to develop tyres around specific climates, road conditions, vehicle applications and performance targets, including EV-specific requirements,” it said. On the factory floor, flexible production lines adjust output as product mix and orders change. The company does not disclose a separate efficiency figure for customised production, though ‘the goal is clear: to increase product flexibility while keeping production efficient’.

The regional examples are concrete. In Asia, X-Tech underpins the X-Elite Truck Tyre Series. In Europe, it is applied to the WESTLAKE Gen II commercial lineup, with a focus on fleet efficiency, performance and regulatory requirements. Phecda sits behind the WESTLAKE ZuperAce Z-007 and GOODRIDE Solmax 1 passenger tyres, and technologies from both platforms have been applied across ARISUN’s full TBR and PCR ranges for the Americas.

“International markets do not have identical requirements,” Shen said. “A tyre developed for European highway fleets, Southeast Asian transport operations or passenger vehicles in the Americas must respond to different vehicles, roads, climates and customer priorities.”

WHAT COMES NEXT

Much of the technology commonly billed as next-generation is already in service at ZC Rubber. Automated logistics, AI-based visual inspection, process optimisation, digital simulation and virtual testing are all in use. Digital twins are applied in areas such as energy management, and a broader digital-twin virtual factory is part of the next-stage plan.

The company frames the coming three years as a period of deepening rather than reinvention: more smart-factory applications, more AI and industry-specific models and close attention to emerging technologies such as humanoid robotics ‘as they mature’.

That phrasing may be the most revealing thing about ZC Rubber’s approach. It is chasing results rather than headlines. As the company itself puts it, the launch of the Hangzhou plant marks ‘a new opportunity and starting point’, and its stated ambition is to become a world-leading tyre company with higher standards. Whether the lights stay on, it seems, is the least of its concerns.

AMETEK recently completed its USD 5- billion all-cash acquisition of a portfolio of instrumentation businesses from Indicor.

The businesses, collectively known as Indicor Instrumentation, make equipment for industrial and scientific applications. Their products serve markets that overlap with AMETEK’s existing operations and generate recurring revenue from consumables, services and aftermarket support.

David A Zapico, AMETEK’s Chairman and Chief Executive, said: “We are excited to complete this highly strategic acquisition and to welcome the Indicor Instrumentation team to AMETEK. With its mission-critical solutions, deep technical expertise, and strong positions in attractive end markets, Indicor Instrumentation is an excellent fit with AMETEK. We also see meaningful opportunities to create value through integration into our proven operating model.”

Indicor Instrumentation is expected to contribute about USD 350 million to AMETEK’s sales in 2026 and to be modestly accretive to adjusted earnings for the year.

The acquired businesses will join AMETEK’s Electronic Instruments Group and Electromechanical Group, according to their products and market focus.

The Goodyear Tire & Rubber Company has elected Joe Hinrichs as chairman of its Board of Directors, effective 7 October 2026. He will also chair the board's Governance and Executive Committees. Hinrichs joined the board in 2023 and succeeds Laurette Koellner, who will retire at the 2027 annual meeting under Goodyear's Corporate Governance Guidelines.

Hinrichs most recently served as President and Chief Executive Officer of CSX Corporation. Before that, he held numerous leadership roles at Ford Motor Company, including President of the Global Automotive Business, Executive Vice President and President of Global Operations, Executive Vice President and President of the Americas, President of Asia Pacific and Africa, and Chairman and Chief Executive Officer of Ford China. He also led Ford Canada. Hinrichs holds a bachelor's degree in electrical engineering from the University of Dayton and an MBA from Harvard Business School.

Koellner previously held several leadership roles at The Boeing Company. She joined Goodyear's board in 2015, became independent Lead Director in 2019, and Non-Executive Chairman in 2024.

Hinrichs said, "I would like to recognise and thank Laurette for her leadership, dedication and unwavering commitment to Goodyear. On behalf of the Board, we are grateful for her many contributions throughout her more than a decade of service. I look forward to working alongside my fellow board members and the leadership team as we continue to innovate, strengthen our competitive position, create long-term value for our shareholders and build a stronger Goodyear."