Hyundai Motor is evaluating the possibility of establishing a vehicle manufacturing plant in Mexico, with a potential investment exceeding US$2 billion and an annual production capacity of between 250,000 and 300,000 vehicles. The South Korean automaker said any decision will depend on the outcome of the upcoming review of the United States-Mexico-Canada Agreement (USMCA) and progress toward a free trade agreement between Mexico and South Korea.

Edgar Carranza, CEO, Hyundai Mexico, said both developments could significantly strengthen the business case for expanding the company’s manufacturing footprint in the country.

“There is certainly interest in continuing to grow, but two important factors still need to be defined,” Carranza told El Sol de México. “The first is related to the USMCA. If Mexico emerges with favorable conditions, it will become even more competitive and represent a major opportunity for the brand to continue expanding in the country.”

Carranza identified a bilateral trade agreement between Mexico and South Korea as the second key factor. “It would be very attractive if a trade agreement between South Korea and Mexico were finalized. It is an issue that has been on the table for many years,” he said.

The executive added that a favorable outcome on both fronts would create a strong environment for new manufacturing investment. “If Mexico secures favorable USMCA conditions and advances a trade agreement with South Korea, Hyundai would have a compelling scenario to expand its manufacturing investment in the country,” Carranza said.

Mexico’s Ministry of Economy announced in 2022 the start of negotiations toward a trade agreement between the two countries, building on six decades of diplomatic relations. Although negotiations have yet to conclude, Hyundai views progress on the issue as an important factor in its long-term investment strategy.

“I know there have been discussions between both governments, and today the outlook appears positive. If those two factors come together, it would undoubtedly be very attractive to make an additional manufacturing investment beyond those the group already has in Mexico,” Carranza said.

Hyundai Motor Group already maintains a significant presence in Mexico through manufacturing, distribution and supplier operations. According to the company, the group has invested more than US$2.5 billion in the country and supports more than 12,500 direct jobs. A new assembly plant would represent the next phase of its expansion strategy.

Carranza said a project of this scale would require an investment of at least US$2 billion, excluding capital expenditures by suppliers that would accompany the facility. Such a project would also generate hundreds of additional jobs throughout the supply chain.

The potential investment comes as Mexico continues to strengthen its position as a manufacturing hub for global automakers. The country serves as an export platform for the United States and Canada under the USMCA while maintaining a growing domestic vehicle market.

South Korean companies have become major players in Mexico’s industrial sector. Hyundai and Kia operate alongside other South Korean manufacturers, including Samsung and LG, which have established production facilities across the country. In 2025, Hyundai and Kia collectively sold 165,669 vehicles in Mexico.

Trade between Mexico and South Korea also continues to expand. According to Banco de México, Mexican exports to South Korea reached US$6.603 billion in 2025, a year-over-year increase of 7.1%, while imports from South Korea totaled US$23.07 billion, up 0.3%.

The bilateral trade relationship has gained additional importance since Mexico implemented tariffs ranging from 5% to 50% on imports from countries that do not have free trade agreements with the country on Jan. 1, 2026. 

For Hyundai, the tariff changes have already created challenges. Carranza said the company has been forced to adjust its sourcing strategy and production allocations to remain competitive in Mexico.

“The advantage of having several plants around the world is that it gives us flexibility in deciding where to source vehicles and remain competitive,” he said.

Mexico recently increased tariffs on imports from countries without free trade agreements, affecting a large portion of Hyundai’s imported vehicle lineup. According to Carranza, the measure raised tariff rates from 20% to 50% for approximately eight out of every 10 vehicles the company imports into the country.

“It’s a significant impact. More than half of our profitability from last year will go toward this, but we have been able to maintain prices because we know we must remain competitive,” he said.

Despite those pressures, Hyundai continues to report sales growth. According to INEGI data, the company sold 21,454 vehicles in Mexico between January and May 2026, a 2.5% increase compared with the same period a year earlier. In May alone, Hyundai sold 4,652 vehicles, up 3% from the previous month.

The automaker ranked among Mexico’s 10 largest vehicle brands during the period, with a 3.4% market share, according to the Mexican Association of Automotive Distributors (AMDA). Carranza said Mexico remains a strategic market because of its size and long-term growth potential. He also noted that more than 90% of Hyundai customers in Mexico recommend the brand, supporting customer retention and future market expansion.