Mercedes Shuts Mexico Plant, Shifts 100,000-Vehicle Capacity to Hungary to Focus on Electrification

Mercedes-Benz plans to cease complete vehicle production at its COMPAS plant in Aguascalientes, Mexico, by the end of 2025, and will discontinue the combustion-engine version of the GLB model in May 2026. The plant, jointly established by Mercedes-Benz and Nissan in 2015, has an annual capacity of 230,000 vehicles but has long operated below full capacity. The decision follows a significant decline in the economic viability of exporting vehicles produced in Mexico to the U.S., driven by the U.S. proposal to impose a 25% import tariff and the ongoing review of the USMCA trade agreement. This move is not merely a plant closure but part of a broader global realignment of production capacity: output of lower- and mid-range combustion-engine models like the A-Class will be consolidated from plants in Germany and Mexico into the Kecskemét factory in Hungary, which will focus on producing electric vehicles. Mercedes-Benz is shifting from a decentralized manufacturing footprint toward a more concentrated, core-focused strategy to enhance efficiency, control costs, and accelerate its transition to electrification.