Kia is planning to break ground on a new assembly plant in Mexico according to a media report.

A Reuters report, citing unnamed sources, said the new plant would be built in Monterrey, have annual capacity of around 300,000 units and specialise in "small cars". The Soul model, hugely successful in the US market, would likely be in the frame.

The report suggested that the facility would help meet demand in the US. Kia needs the plant due to capacity constraints at its US plant.

In April, Kia Motors America sold its five millionth vehicle, with the monthly total up 12.9% to 53,676, of which 14,403 were the Soul model alone, a monthly record for the car. Some analysts say that if KMA had the capacity at its West Point plant, it would add the Soul model there alongside the Optima, Sorento and Hyundai Santa Fe. A new low-cost plant in Mexico could be a solution.

Mexico is also seen as a vehicle market with good long-term demand prospects.

A strong South Korean currency is putting pressure on Korean manufacturers to increase output at overseas operations.