Summary: Mexico’s manufacturing sector attracted US$46.9 billion in European investment between 2015 and 2024, driven by automotive, auto parts and aerospace production. Mexico is strengthening its role in North American supply chains and nearshoring strategies. Moreover, the modernized Mexico-European Union Global Agreement is expected to accelerate bilateral trade, expand market access and increase European investment in advanced manufacturing, energy, pharmaceuticals and technology through reduced tariffs, updated investment protections and procurement access. Major European manufacturers including Volkswagen Group, BMW and Airbus are among the companies positioned to benefit from deeper industrial integration and regulatory alignment between Mexico and the EU. 

 

Mexico’s manufacturing sector attracted US$46.9 billion in European investment between 2015 and 2024, accounting for 53% of all European Union capital received by the country during the period, according to an analysis by the Mexican Institute for Competitiveness (IMCO). The investment surge comes as Mexico City hosts European Union leaders for the VIII Mexico-European Union Summit, where both sides are expected to formalize the Modernized Global Agreement aimed at expanding trade, investment and industrial cooperation.

European Commission President Ursula von der Leyen and European Council President António Costa arrived in Mexico City ahead of meetings with Mexican President Claudia Sheinbaum to advance the updated trade framework, which is projected by COMCE to increase bilateral commerce by 35% over the next five years, reported MBN. 

The agreement comes as Mexico seeks to strengthen its position within North American supply chains while diversifying export markets and attracting additional industrial investment from Europe in sectors tied to advanced manufacturing, mobility, energy and technology. 

Manufacturing and Automotive Lead EU Capital Flows

The IMCO study identified manufacturing as the primary destination for European investment due to Mexico’s export infrastructure, logistical integration with the United States and established industrial ecosystems in key manufacturing states.

In 2024 alone, Mexican manufacturing industries captured US$5.8 billion in European investment. Transportation equipment manufacturing represented the largest segment, accumulating US$21.6 billion between 2015 and 2024.

Germany played a central role in that growth through investments linked to companies including Volkswagen Group, BMW, Mercedes-Benz, Bosch and Continental AG. The auto parts segment also posted strong growth, reflecting the expansion of electric vehicles and specialized component production in Mexico.

Production of motor vehicle parts accumulated US$9.1 billion in European investment during the period, with Germany contributing 61% of total EU investment in the subsector. Companies such as Aptiv and Mergon were identified as part of the industrial network supporting vehicle electrification and advanced manufacturing operations. 

Aerospace Industry Expands in Querétaro

Beyond automotive manufacturing, European companies have expanded their footprint in Mexico’s aerospace industry, particularly in the Bajío region. IMCO highlighted the growing aerospace cluster in Querétaro, where European firms including Safran, Airbus and ITP Aero maintain operations.

The manufacturing of aerospace equipment received US$194.7 million in European investment, led primarily by France and Germany. The report also noted that European investment has expanded into infrastructure, construction, energy and services as Mexico increases industrial capacity tied to nearshoring and regional supply chains.

Between 2015 and 2024, the construction sector accumulated US$3.6 billion in EU investment, while the energy sector captured US$3.4 billion.

IMCO identified opportunities to further expand European investment across the Bajío, northern and southeastern regions of Mexico, especially in industrial machinery, chemicals, pharmaceuticals and energy transition projects. The institute also recommended strengthening partnerships between companies, universities and technology centers to develop specialized talent and support the relocation of global production chains. 

Mexico-EU Agreement Targets Trade Expansion

The renewed focus on European investment coincides with the first high-level Mexico-EU summit in 11 years, following approval of the updated agreement by all 27 EU member states on May 11.

According to COMCE, the new framework is expected to significantly deepen economic integration between Mexico and the European bloc. Mexican exports to the EU are projected to increase between 25% and 40%, while European exports to Mexico could rise between 15% and 30%, driven largely by capital goods and technology, reported MBN. 

The updated accord replaces an agreement that had been in effect since 2000, during which bilateral goods trade increased by more than 300%. In 2025, bilateral trade exceeded US$94.5 billion, while the EU contributed US$9.9 billion in foreign direct investment to Mexico.

“Together we represent a market of more than 582 million people and a GDP of US$25.1 trillion,” said COMCE President Sergio Contreras. Costa described the agreement as opening “a new chapter in our partnership.”

The agreement also reflects broader efforts by both Mexico and the EU to diversify trade relations amid shifting global trade conditions and tariff pressures. In 2025, the EU remained Mexico’s third-largest trading partner after the United States and China. 

New Rules Expand Market Access

The modernized agreement removes most remaining customs duties and eliminates 95% of Mexican tariffs on EU agricultural exports while protecting 568 European geographical indications, including Champagne and Rioja wine.

COMCE outlined a phased implementation timeline across strategic sectors. Agricultural products such as avocados, berries, tequila and mezcal are expected to benefit immediately, while automotive and auto parts industries are projected to see impacts within six to 18 months. Advanced manufacturing sectors are expected to follow within 12 to 24 months, with pharmaceutical and chemical industries integrating over a three-year period.

More than 45,000 European companies currently export to Mexico, 82% of them small and medium-sized enterprises.

The agreement also establishes a specialized Investment Court System to resolve investor-state disputes and grants European firms access to Mexican state-level public procurement contracts. Additional provisions eliminate export restrictions on raw materials, prohibit export monopolies and ban dual pricing mechanisms tied to critical minerals.

The framework further includes binding anti-corruption, environmental and labor provisions designed to align trade expansion with sustainability and regulatory standards.

Cyprus Trade Minister Michael Damianos said the agreement supports the EU’s strategy to diversify global trade partnerships while strengthening economic ties with Mexico.