Chinese automakers haven't even properly entered North America yet, but Nissan is already preparing for the next phase of the invasion. The Japanese automaker believes Chinese brands could begin building cars in Mexico within the next two to three years, bringing their low-cost manufacturing advantage much closer to the United States.
Nissan Americas Chairman Christian Meunier predicted while speaking at the company's headquarters in Yokohama, Japan. As reported by Automotive News, Nissan cautioned that it needs to slash costs now because Chinese automakers won't remain dependent on exports forever. Once they localize production in North America, competing on price will become considerably harder for established automakers.
“It will happen probably in the next two to three years, so we need to be ready,” Meunier said, referring to Chinese automakers setting up production in Mexico. Chinese brands already have a presence in Latin America, while Mexico offers an established automotive manufacturing base and proximity to the lucrative U.S. market. Building locally would also help Chinese automakers avoid some of the tariffs that make importing finished vehicles into North America more expensive.
Nissan Wants To Fight Chinese Cars With Chinese Cars
Nissan is particularly concerned about the resulting price war. Meunier says the company needs to become significantly more cost-competitive, arguing that its current supply and cost structure isn't good enough to rival BYD and co.
'Cost competitiveness is going to be the rule of the game in the next five years.'
Nissan's strategy involves using some of China's strengths against Chinese automakers themselves. The company is already expanding exports of China-developed and China-built vehicles into Latin America. Nissan is launching the Frontier Pro plug-in hybrid pickup in Mexico and will expand it elsewhere in Latin America, while the N7 electric sedan is also heading into the region. Both are products of Nissan's partnership with Dongfeng.
Nissan has previously discussed using its Chinese production operations as an export hub, with an initial target of around 100,000 vehicles and a longer-term goal of reaching 300,000 annually. The company has also considered sending China-built EVs to Canada, where the government has opened the door to a limited number of Chinese-made EVs.
That's a pretty dramatic change from the traditional playbook. Instead of developing a car in Japan, shipping it around the world, and adapting it for each market, Nissan is increasingly looking to China for affordable products that can compete internationally.
The United States Is Still A Different Story
However, Chinese-built cars aren't exactly about to flood American dealerships. The United States maintains significant barriers against Chinese vehicles, and lawmakers have also been pushing legislation that would permanently prevent Chinese automakers from selling vehicles in the country.
Meunier still expects Chinese brands to eventually enter the U.S. market. He estimates it could take at least five years, but building in Mexico would give Chinese automakers a major foothold in North America long before then.
And evidence already shows Chinese manufacturing can reach the U.S. market indirectly. Chinese-built vehicles from established global brands have been sold in America, including the Buick Envision, Volvo S90, Polestar 2, and Lincoln Nautilus.
The bigger question is what happens when the Chinese companies themselves establish factories just south of the U.S. border. That's the scenario Nissan is preparing for.
Nissan Frontier Pro (China)
After Japan And Korea, China Is The New Threat
Looking back, the automotive industry spent decades worrying about Japanese and Korean automakers building cars in North America. Now, China is preparing to play the same game, but with a massive EV industry, extremely aggressive pricing, and development cycles traditional automakers can only dream of.
Nissan's warning is therefore less about Chinese cars suddenly appearing in U.S. showrooms and more about what happens when the geographic advantage disappears. If BYD and its rivals can build affordable cars in Mexico rather than ship them halfway around the world, the old argument that tariffs will keep Chinese automakers away starts looking considerably less convincing.
And Nissan apparently isn't waiting around to find out. It is cutting costs, increasing localization, and, somewhat amusingly, borrowing China's own playbook by developing vehicles in China that can be sold elsewhere. Fighting the Chinese automakers with Chinese-developed cars might sound strange, but in today's car industry, the stranger strategy might be pretending the competition isn't coming.
As someone who lives in Europe, I can confidently say the Chinese invasion has already begun here. The numbers back that up, with BYD now close to outselling Ford on the continent. Through August this year, Chinese automakers held a 10.4 percent share of the European market, a figure that would have seemed almost unthinkable just a decade ago.
