Audi favours Mexico for new Q5 assembly plant
Audi is close to selecting Mexico as the site for its next North American factory, with the new plant expected to assemble the next-generation Q5 SUV.
Audi is preparing to build a new assembly plant in North America, with Mexico emerging as the front-runner over the United States. The new factory is expected to produce the next-generation Q5 SUV, a key model in Audi’s global line-up.
Volkswagen Group, Audi’s parent company, has indicated a preference for Mexico instead of expanding its existing US facility in Chattanooga, Tennessee. According to reports, the decision is pending board approval, but the momentum is behind a Mexican location. The company already has a major plant in Puebla and is set to open another in Silao, which will supply engines for North American production.
Why Mexico is likely to win the investment
Mexico’s established supplier base and lower labour costs have made it a popular choice for global automakers. For Audi, a key factor is the ability to avoid the 10 percent duty imposed on US-built vehicles exported to Europe. Building in Mexico allows for more competitive pricing on Q5s shipped back to the continent, supporting Audi’s ambition to overtake BMW as the world’s top-selling luxury marque.
Audi’s move follows a broader trend among carmakers to cluster production in Mexico, taking advantage of trade agreements and proximity to the US market. Volkswagen’s Puebla plant already produces several models for global export, and the Silao engine facility is designed to support both Volkswagen and Audi operations across North America.
Automakers often group assembly plants near each other to maximise supplier efficiency. However, some also spread facilities across neighbouring regions to build political support and diversify risk. The final decision on the Q5 plant is expected to weigh these factors alongside cost and logistics.
Implications for US and Mexican workers
If Audi selects Mexico, it would bring new jobs and investment to the region, reinforcing Mexico’s status as a manufacturing centre for premium vehicles. For the US, the decision means Chattanooga will remain focused on Volkswagen-branded models for now, despite earlier speculation that it could be expanded for Audi production.
Audi’s global sales continue to grow, with over 346,000 vehicles delivered worldwide in the first quarter. The new North American plant is aimed at supporting this growth, reducing lead times, and strengthening Audi’s supply chain in the region.
Mexico’s growing role in global car production
Audi’s likely investment in Mexico fits a pattern seen across the industry, as manufacturers seek to optimise production costs and access export markets. For more on Mexico’s emergence as a major automotive hub, see Mexico’s Car Production Surges as Global Automakers Invest Billions.
