MEXICO CITY, Sept. 2 — Mexico’s auto parts sector recorded 10% year-over-year growth from May 2025 to May 2026, and its share of total US auto parts imports increased from 42.5% to 44%, according to an interview the Mexican Auto Parts Industry Association (INA) published August 26. The bottom line: Kia’s US$649 million investment in Mexico is the latest signal that global OEMs see the country as a core manufacturing hub, not a stopgap.
INA cited the announcement as evidence of strong confidence in the sector, saying the money is expected to focus on incorporating and strengthening Mexican suppliers at the Tier 2 and Tier 3 levels. INA pushed back on the idea that US political dynamics are driving corporate realignments away from Mexico.
The association said those shifts stem from global dynamics that run deeper than political decisions in the United States, and the tangible result is that Mexico is producing and selling more auto parts to the United States — in both absolute and relative terms. The propulsion picture is mixed. Demand for 100% battery EVs has slowed regionally and globally, partly due to policy shifts in the European Union, INA said.
Hybrid sales have improved considerably, and internal combustion engines are seeing a commercial resurgence that directly benefits the auto parts sector. There is idle capital from paused electric-platform investments, but INA argued the present clarity surrounding market boundaries and scope now gives the industry stability. The real opportunity is elsewhere. INA said the greatest opportunities lie beyond propulsion, in electronic architecture and digitalization.
The industry is migrating from vehicles with up to 90 control modules to centralized architectures featuring just two computers — one for telemetry and infotainment, another for advanced driver-assistance systems. The software demand is staggering: a modern commercial aircraft requires around 1.5 million lines of code, but a next-generation automobile will require up to 150 million lines, because the terrestrial environment demands an immensely higher response capacity to navigate unpredictable urban surroundings.
To capitalize on those technologies, INA identified three development priorities for Mexico: interiors and advanced materials, including gigacasting and megacasting that reduce multi-piece assemblies into single components; digital systems for active safety, connectivity and infotainment; and powertrain systems tied to electrification and hybridization. Investors will note the human capital caveat. INA stressed that Mexico needs human capital tailored to these new technological demands now — waiting for the completion of full technical or university degree cycles, the association said, is not always feasible.
What to watch next: whether Mexico’s supplier base can move up the value chain fast enough to capture the software and electronics work that increasingly defines the modern vehicle — and whether the hybrid and ICE resurgence holds as EV policy shifts continue to reshape global demand.
