Nissan Cuts Costs on Mexico-Made Models to Counter 25% U.S. Tariff

Nissan Motor is taking steps to reduce manufacturing costs for models produced in Mexico to offset the additional expenses caused by the U.S. imposing a 25% tariff on Mexican-made passenger vehicles. With the renegotiation of the USMCA failing to reach an agreement before the July 1 deadline, Nissan now faces higher prices and declining sales for its Mexico-built vehicles in the U.S. market. CEO Ivan Espinosa stated that the tariffs have added $2,500 to $3,000 in costs per vehicle for entry-level models like the Sentra and Kicks, eroding their price competitiveness in the U.S. These two models are still manufactured in Mexico, relying on the country’s lower labor costs to keep retail prices manageable. Moreover, over one-third of Nissan’s U.S. sales last year came from vehicles produced in Mexico, including the discontinued Versa sedan and Infiniti QX50 and QX55 SUVs—the Versa was the only passenger car in the U.S. market priced below $20,000. To mitigate the impact of tariffs, Nissan has shifted some models to U.S.-based production. By early 2025, the share of Nissan vehicles sold in the U.S. that are domestically produced had dropped to 45%, down from 60% at the end of 2023. Espinosa emphasized that the company will continue advancing its localization strategy in the U.S., asserting that increasing local investment makes strategic sense under the current trade environment. Additionally, in the interview, Espinosa noted that Chinese automakers follow a development model distinct from those in other regions and that leading Chinese companies are currently spearheading the formulation of multiple future automotive industry standards.