At one time, most of the cars produced in Mexico were sold in Mexico. Today, however, Mexico both exports and imports cars. What is a plausible explanation for this observation? How could comparative advantage explain this scenario?

Mexico either specialized in the production of high end cars which it exports, while it imports low end cars for its domestic market. Since Mexico is a developing country, most of the cars sold domestically will be low end cars.

Countries manufacture and export the goods which they can produce at a lower opportunity cost since they have a comparative advantage in their production. Mexico probably has a comparative advantage in the production of high end cars (specially vs. the US) which generate higher revenues.