Finished vehicle logistics in Mexico
Chain reactions in Mexico’s vehicle logistics network
At this year’s Automotive Logistics & Supply Chain Mexico conference, logistics and supply chain experts from GM, Nissan, VW, Chirey and Great Wall Motor outlined their strategies for tackling capacity constraints and volume fluctuations in vehicle import-export
Mexico's automotive industry has been growing strongly for a number of years now and all the while carmakers and their finished vehicle logistics providers have been dealing with perennial capacity constraints at the ports, security problems on Mexico’s roads and disruptions to rail services for both cross-border and port connections.
The dramatic influx of Chinese brands into Mexico and the prospect of their local production is putting added pressure on infrastructure. To add to all of this, carmakers are now trying to figure what the revisions to vehicle tariffs means for their business, not just for deliveries of vehicles made in Mexico to the US but for vehicles being delivered to Mexico from countries with which it does not have free trade agreements.
Tackling transport and storage capacity shortages is nothing new to VW de México, which has been making vehicles in Puebla since the late 1960s. Bernardo Taboada Cortina, head of logistics planning at VW de México, told delegates at the ALSC Mexico conference this month that it is focusing on balancing volumes and being flexible with transport modes.
The carmaker uses rail for northbound shipments to the US and Canada, as well as moving vehicles for short and deep-sea shipments by truck and rail to the ports of export on each Mexican coast. For VW de México that means moving finished vehicles to the port of Tuxpan on the west coast and Lázaro Cárdenas on the east coast.
Advertisement
Taboada said that better road, rail and port-adjacent infrastructure will help bring better and more cost-efficient vehicles flows, which is more important than ever now that VW de México will be making the VW Golf at its Puebla plant for global distribution from 2027.
Distribution from Veracruz
Carmakers at the ALSC Mexico conference pointed to the need for improvement in finished vehicle capacity at the ports. Carillo pointed out that import and export points at the ports are congested. In response, Nissan Mexico has taken matters into its own hands to improve the distribution of vehicles it imports from India to Mexico by opening a vehicle distribution centre at the port of Veracruz.
Alex Carillo, deputy director of finished vehicle logistics at Nissan México explained that previously the carmaker was moving those vehicles from Veracruz to its plant in Aguascalientes, where it makes 80% of the cars it sells in Mexico to 250 dealers. Changing the distribution point for imports to Veracruz has made things more efficient, according to Carillo, and the decision was made in part thanks to listening to its logistics providers.
Carillo also said that Nissan has opened new routes to manage export volumes, stressing the importance of finding alternative routes and modes to export vehicles from Mexico, not least because carmakers are all using the same infrastructure and logistics partners.
Nissan is exporting volumes from Mexico to the Middle East at the moment and is looking to push more volumes there said Carillo.
“Europe is also a good destination for us and with the LATAM consolidation for Nissan, we also have a really strong logistics team to ship vehicles down to South America, including Brazil and Argentina; all those countries are receiving vehicles,” he added.
Securing capacity enables carmakers to gain the flexibility in services required in the daily dynamic of Mexican vehicle shipments, which can include sudden production changes, political or economic impacts or even natural disasters, according to Antonio Zepeda Torres, commercial director at Mexican vehicle logistics provider CSI Group. He said it was important to optimise capacity by making the best possible use of infrastructure having in place enough well trained and committed people, as well as having reliable processes supported by IT.
Advertisement
Finished vehicle tariffs
Planning for vehicle imports and exports has been made more uncertain this year by the US-led (often vacillating) revision to finished vehicle tariffs, as well as the threat of port fees in the US for vessels built in China (currently suspended for one year effective November 10).
Taboada said that it is important to understand what the exact implication is of each tariff announcement, which is often hard to discern from Trump’s social media posts or statements, each of which elicits a different interpretation according to companies and legal experts.
He added that VW de México is working very closely with peers across the North America region and is having weekly meetings to decide on deliveries. It is a fluid situation and VW de Mexico has to decide from one week to the next whether to send vehicles or stop deliveries.
“That been very challenging – first to understand the implications and therefore to try to plan strategy according to that,” he said.
When the tariffs came in April there was initially an increase in demand for shipments as carmakers tried to move as much across the border before the tariffs took effect. Then there was a drop off. What is important, according to Taboada, is to be transparent with the logistics providers.
“Volatility will be there always but if we are able to show as quick as possible the change of tenders, it will be easier together to find a solution and to react either for the peaks or the valleys,” he said.
Carillo said that Nissan Mexico was in a good position (as indicated above) by making 80% of what it sells in Mexico at its Aguascalientes plant and is there able to adjust production volume and mix locally, according to demand, and increase deliveries to the dealer network where and when needed.
Advertisement
Nevertheless, for the 20% the carmaker imports to sell in Mexico means it has to deal with the impact on shipments of the trade disruption, alongside the aforementioned port congestion, especially on the Pacific coast ports of Mazatlán and Lázaro Cárdenas. “You need to anticipate some volume spikes and you need to adjust the storage [capacity] and the network to be prepared and have that available for the kind of vehicles needed,” said Carillo.
Digital optimisation
Investment in digital technology is helping carmakers manage those spikes and capacity problems, as well as helping to make better use of logistics teams’ time and effort to manage complexity.
Taboada said there are opportunities with the right AI applications, such as for handing big data, to enable specialists to make the best decisions with accurate information in a much quicker way and avoiding anything that does not add value.
“It is a huge development and on a normal daily basis the use of CoPilot, ChatGPT means you can help the teams be more efficient because we are under pressure to do more with less resource,” he said.
VW de México is currently working on a big optimisation programme in logistics, reviewing each one of the processes involved in vehicle distribution. “If you can do that through simulations or whatever digital tool that you have, it is more efficient,” he said.
Carillo said that Nissan was reviewing AI applications to look at what it could adopt for network design. “We have more than 250 dealers in Mexico and we export vehicles to more than 65 countries, so if we could get a real application from AI to evolve the current way that we are transporting our vehicles, I think that would be key,” he said.
Nissan is focused on balancing quality, timing and cost efficiency and that balance depends on strong partnerships with logistics providers where you can review ideas and run projects to evolve logistics processes, according to Carillo. Digital tools can support that process.
Digital technology is also affording greater flexibility to respond to changes for GM de México. Bernardo Músquiz Pezino, finished vehicle logistics manager, at the carmaker said 2025 had been a perfect example of the need for flexibility and resilience, which had been supported by investments in AI, machine learning and BI dashboards, which have enabled good connections and predictive analytics. Músquiz said that this year GM de México has cut down 2,000 hours of transactional work based on automation and improved 70% its time in custom clearance processes by using automation.
“We have now real time information with which we can help predict and pivot around our monthly objectives. It has resulted in 98% reliability,” he said. “It is a clear example of how investing in our licences for AI, investing also in workshops and in training for our team, has meant a good year for GM de México.”
Great Wall Motors is currently importing annual volumes of around 10,000 vehicles into Mexico for distribution to around 50 dealers. Eduardo Páez, logistics manager at the Chinese carmaker’s Mexico division, said the carmaker plans capacity on a monthly basis but with an eye on weekly cycles, and manages dynamically which vehicles need to be fast moving according to demand.
To support this Páez said that GWM in China has its own digital tools for logistics applications, covering such applications as transport planning systems, and track and trace of the vehicles in transit. The successful applications are given to the carriers working with the company rather than GWM relying on third party providers of that technology to help them. That is something GWM is going to pass on to operations in Mexico, according to Páez. He said that target cost per unit is important for every lane and that relies on strong communication with logistics partners.
China import volumes
Mexico is planning to raise import taxes on Chinese vehicle imports from 20% to 50%, part of a wider draft bill that seeks to place higher tariffs on more than 1,400 types of imports to Mexico coming from countries with which it has no free trade agreements.
Thus far, however, Chinese imports have been increasing and some Chinese carmakers seem unphased on the tariffs, much the same as in Europe. Last year Mexico imported around 445,000 vehicles from China and logistics providers are having to be agile in balancing the flows from China with other more established volumes.
Sergio Gutierrez said that influx is increasing demand for capacity on the ports, something Glovis America is seeing at the port of Lázaro Cárdenas where it has recently created a new bonded area and is establishing a first point for rest for unloaded vehicles. That new market for Chinese vehicles has to be balanced with the established imported brands that Glovis is handling for sale in Mexico as well as the volumes it is helping export, Gutierrez explained.
“At the end of the day we need to be very nimble and flexible,” said Gutierrez. “Every niche deserves the service and the quality.”
However, Gutierrez said it is important to balance services for niche Chinese brands with maintaining regional agility of using additional ports in better locations and being able to switch from one to the other as needed, rather than reinforcing flows to one single point of entry or exit.
Antonio Zepeda also recognised the impact on Lázaro Cárdenas and at Mazatlán and said that the right capacity had to be available for Chinese imports, and the right equipment and manpower needed to be in place, as well as adequate management of customs and enough transport capacity to get the vehicles off the port.
Cars in containers
The ability to be flexible between transport modes is important in managing capacity for finished vehicle moves and in previous capacity shortages on ro-ro in Mexico saw carmakers move more volumes of cars in containers. That is now a consideration as port capacity and shortages of space on road and rail test outbound delivery options.
VW de México learned to appreciate moving cars in containers when it faced a transport crisis in Mexico two years ago. VW needed to act quickly to find alternatives to move its vehicles and it chose containers to do so, to the US and Canada to begin with. However, what started as a necessity in the face of disruption turned out to be a more cost-effective solution for shipments to low volume destinations and VW has adopted the method for normal deliveries to those markets in certain cases.
While not part of Glovis’ business model, Gutierrez said what matters is the ability to be flexible between transport modes. “I was not a big fan seeing all these containers being shipped full of cars but I have to admit that they move fast,” he said. “Ultimately, what matters the most is really client’s needs… we need to embrace different options and solutions.”
Gutierrez did note that this could not impact the CPU because the cost cannot be passed onto the customer.
Chiery México’s head of logistics, Carlos Augusto Eudave, agreed it is important to evaluate the cost of this mode of moving finished vehicles and what is the likely impact on the quality of the vehicle being moved. It is also about assessing the risk to shipping flow. Like Gutierrez, he acknowledged that ultimately the objective is to move the vehicles and meet what the market demands and if there is not enough normal ro-ro capacity then everything needed to be explored and considered.
Chirey México’s strategy for outbound logistics
In a keynote address at ALSC Mexico, Carlos Augusto Eudave, head of logistics at Chirey Motor México, outlined the company’s logistics strategy of in Mexico. Formerly Chery Automobile, the state-owned Chinese carmaker started operations in Mexico in 2022 and combines the brands Chirey, Omoda, and Jaecoo under one roof. Parent company Chirey International has been exporting vehicles from China for 23 years and its increase in exports over that time represents a big logistics challenge, according to Augusto.
“We need to work with the right partners and we need to work in the right ways to move our vehicles to the right place in the correct time,” he said, adding that was crucial in a year when it is launching nine models.
In Mexico specifically Chirey has 85 dealers and it is looking to increase presence in the country, which means finding long-term logistics partners that can provide transport and value-added services as well as providing innovation for local operations in Mexico.
Four-pillar strategy
Flexibility on a day-to-day basis is fundamental to Chirey México’s supply strategy and central to achieving that is having a talented workforce on the ground. Augusto said knowledge and skills in how to move adjust operations quickly and negotiate that with supply chain partners is essential to its agile vehicle logistics model.
There are four main pillars to Chirey’s strategy in Mexico, according to Augusto. The first is awareness of external factors. There are various factors impacting the outbound supply chain and forcing fluctuations in volumes and available capacity be it geopolitical dispute, economic downturn or extreme weather event. While carmakers can’t control those events, they can be increase awareness of them and be ready to react. Augusto acknowledged that events can change quickly but he also noted that technology is increasing the speed of communication and helping carmakers react and adapt, and limit the impact on the supply chain.
The second pillar is network design which has to be flexible with changes in the outbound delivery process. “We need to secure capacity and we need to give the visibility to our partners what will happen in the next weeks, in the next years,” said Augusto. “This network design needs to have a different ways to resolve problems, to have a plan A, B and C.”
Chirey’s network design is geared to accommodate changes to the flow of volumes or to the need to increase or decrease production. “If you are selling more vehicles, you have to be prepared to increase capacity,” he said.
The third pillar in Chirey’s vehicle logistics strategy is strong logistics partnerships with established service providers that are committed to growing the range of services with Chirey as its brands develop in Mexico.
The fourth precept in Chirey’s supply chain strategy is measurement for improvement. Once the network design is in place, you need to measure performance and share the metrics with the operations team to assess where that performance can be improved.
Augusto said that over the three years Chirey has been active in Mexico its strategy has evolved and that evolution is going to continue, placing emphasis on the flexibility required in the operating model and the overall strategy of building stability into vehicle logistics processes in Mexico.
Network transparency
Every market is different for Chirey and the carmaker has identified the necessities of doing business in Mexico, according to Augusto. It also has visibility on the fluctuations likely in the market and what that means for the distribution of core models chosen for the market. With that information the carmaker can look for further opportunities.
“We then confirm if our systems are ready to be adapted for those opportunities but don't create a lot of systems that work in different ways,” said Augusto. “We are working to integrate in one system.”
That goes globally for Chirey International, which is looking to integrate data from different global markets. “We're working directly with them in master data management – the integration of all systems from order to final delivery, and including the inventory at the dealers,” said Augusto. It is full visibility and we will launch that in the next year.”
Chirey will have transparency on global sales performance and benefit from predictive ordering from production in China for what is in demand, with visibility of what is in transit by ocean and what the current inventory is in Mexico, as well as what is held at or in transit to the dealers.
Augusto said that Chirey México is also exploring AI to integrate that information for better forecasting, also considering external conditions, such as market economics and geopolitics. “AI is helping us to have a lot of flexibility in production and in allocating capacity,” he told delegates. “We are also using that tool to assess the condition of the highways in Mexico, to know what is the best route to ship today and what is the best route to ship tomorrow, enabling us to change every time.”
Troubleshooting at GM
GM’s Pezino also picked up on the ultimate goal of meeting market demand by whatever means necessary and said that there is greater agility now to do so. As a major exporter from Mexico, GM is used to taking decision on exports to hit monthly objectives and Pezino highlighted the fact that this year the carmaker has used different methods to get volumes cross-border to the US via car haulier or flatbed truck. “Not only did we implement it to a more robust way, but we did double of what we thought we could by maximising every mode,” said Pezino. “We continue to break the status quo by creating new paths towards a seamless logistics, and bring our finished vehicles to the customers at the right time and at the right cost.”
Pezino co-hosted workshop at this year’s conference (with his colleague at GM de México, Maria Fernanda Varela Ortiz) focused on throughput and efficiency at Mexico’s ports, which are vital to GM’s exports to international markets and especially north to the US and Canada. Pezino outlined that as well as capacity constraints at the ports, carmakers faced problems in exporting vehicles before they even got to the port of export because of vandalism and theft on inland services. That can impact delivery times.
GM has been addressing the problem in collaboration with its service providers using workshops to look at the root causes and the main pain points in vehicle export logistics in Mexico. Pezino reports significant success as a result of the focus groups.
“We've actually reduced dwell time at the ports of 50% and we’ve reduced by 60% our cost associated to that dwell,” said Pezino. Thanks to collaboration with our ocean carriers, for instance, we have more synergy for shipping our units, so instead of waiting every other week to ship, now we can do it every three or four days.”
Pezino said that allows the port to be more dynamic with its capacity and solve bottlenecks that can impact every OEM using the vehicle terminals. “We certainly don't want to be part of the problem but part of the solution,” he said.
