• Plant to be located in Monterrey, Nuevo Leon region
  • Construction to begin in September
  • 300,000 vehicles a year capacity
  • Kia’s global capacity will rise to 3.37m vehicles a year
Soul (pictured) and Sportage SUV are Kias fastest growing models in the US this year and logical choices for Mexican build. just-auto data shows Soul sales up 22.6% to 89,708 YTD end July while Sportage - due for a redesign before Mexican output begins - rose 36.2% to 24,368

Soul (pictured) and Sportage SUV are Kia's fastest growing models in the US this year and logical choices for Mexican build. just-auto data shows Soul sales up 22.6% to 89,708 YTD end July while Sportage - due for a redesign before Mexican output begins - rose 36.2% to 24,368

Kia is to build a new US$1bn factory in Mexico to build a range of "yet to be confirmed compact models" for North and South American markets.

Production at the plant in the north eastern state of Nuevo León is slated to begin in the first half of 2016, with capacity reaching 300,000 vehicles a year. Unnamed sources told Reuters the Forte compact would be one of the models built there and it is understood that Soul and the next generation Sportage crossover would also be logical choices.

Kia said the additional capacity would help address supply shortage in the US where the brand has been growing rapidly. Sales reached 535,179 last year, up from 300,063 vehicles in 2009 and 2014 volume was 7% ahead year on year to the end of July at 349,722.

The company said it will also use Nuevo León as a base to expand its presence in Central and South America (parent Hyundai has two plants in Brazil) with the additional capacity freeing up capacity in South Korea to support growing demand globally. Vehicles built in its home market accounted for 57% of Kia's global sales last year, compared with 38% for sister company Hyundai.

Carmakers are finding Mexico an attractive production hub thanks to its free trade agreements with more than 40 other countries (including Brazil) while low labour rates help mitigate fine profit margins on small cars in the US. Mazda, Nissan and Honda have either established production or announced plans to build small cars there.

The new plant could also pave the way for Kia to start selling cars in Mexico where it currently does not do so because of high tariffs on imported cars from South Korea. The company said: "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 in the world in which Kia does not have a sales presence."

Kia already has a US assembly plant in Georgia which produces the larger Optima and Sorento models alongside Hyundai's Santa Fe SUV.

Show the press release

KIA SIGNS US$ 1 BILLION AGREEMENT TO BUILD A NEW MANUFACTURING PLANT IN MEXICO

28/08/14
  • Plant to be located in Monterrey, Nuevo Leon region
  • Construction to begin in September
  • 300,000 vehicles a year capacity for new plant
  • Kia’s global capacity will rise to 3.37 million vehicles a year

Kia Motors Corporation has announced it has signed an investment agreement with the government of Mexico to build a state-of-the-art manufacturing plant in Monterrey which is located the north-eastern state of Nuevo León.

The official investment agreement was signed at the Technological Museum of the Electricity Federal Commission (MUTEC) in Mexico City, and was attended by a delegation of key executives from Kia Motors, led by Hyoung-Keun Lee, Vice Chairman of Kia Motors Corp., and a host of Mexican government dignitaries including Enrique Peña Nieto, President of Mexico, and Rodrigo Medina de la Cruz, Governor of the State of Nuevo León.

Construction on the Kia Motors Mexico plant is scheduled to commence in late September, and when completed in the first half of 2016 it will boast an annual production capacity of 300,000 vehicles. The plant will boost 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.

Representing an investment of approximately US$1 billion by Kia Motors, the new, highly automated manufacturing plant will be situated on a 500 hectare (53.8 million square foot) site that will also be home to numerous supplier companies’ facilities.

As one of the world’s fastest growing automakers in recent years, 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. Mexico is well-known for its skilled labour force and numerous free trade agreements (such as NAFTA) with about 40 countries.

Kia expects the Mexico plant to play a major role in alleviating current global supply issues thanks to its strategic geographic location. 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. Kia also 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.

Hyoung-Keun (Hank) Lee, Vice Chairman of Kia Motors Corp., said, “All of us at Kia Motors are proud to signal in a new era for the brand with the announcement of our first manufacturing plant in Mexico. We are committed to producing world-class quality vehicles here in Mexico that feature industry-leading styling and high-tech convenience and safety features that customers have come to expect from Kia, while making significant contributions to both the economic growth of the State of Nuevo León and the future development of the Mexican automotive industry.”

Original source: Kia

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