28 August 2014

Kia Motors to build new manufacturing plant in Mexico

27 August 2014 - Kia Motors Corporation has signed an investment agreement with the Mexico government to build a manufacturing plant in Monterrey which is located the northeastern state of Nuevo León. Representing an investment of approximately US$1 billion by Kia Motors, the new, highly automated manufacturing plant will be situated on a 500 hectare site that will also be home to numerous supplier companies' facilities.

Construction on the Kia Motors Mexico plant is scheduled to commence in late September of 2014, and when completed in the first half of 2016 it will boast an annual production capacity of 300,000 vehicles, thereby boosting Kia's total global manufacturing capacity to 3.37 million vehicles, including 1.69 million vehicles at domestic Korean plants and 1.68 million at overseas plants. Kia plans to produce a range of yet-to-be confirmed compact models at the new plant. 

Kia Motors Corporation has been evaluating various options for entering new overseas markets to secure future growth for the brand. With its strong growth forecasts for new vehicle demand, Mexico was chosen as the site for Kia's next overseas plant given that it is one of the few remaining major markets of the world in which Kia does not have a sales presence.

For Korean automakers to competitively enter the Mexico market, the establishment of local production facilities is pivotal as Mexico imposes high tariffs on imported cars from Korea. Moreover, Mexico is well-known for its skilled, low-cost labor force and numerous free trade agreements (such as NAFTA) with about 40 countries.

Meanwhile, Kia expects the Mexico plant to play a major role in alleviating current global supply issues thanks to its strategic geographic location. Namely, its proximity to the USA will enable the company to better address the ongoing supply shortage situation that has arisen due to the dramatic growth of the Kia brand in the US market. Furthermore, Kia plans to utilize the plant as a foundation for strengthening the brand's sales presence throughout the entire Central and South America region while freeing up supply from Kia's domestic plants to address supply shortage issues in other regions of the world.

Source: Kia Motors