Kia Motors Corporation has signed a US $1billion investment agreement with the Mexico government to build a manufacturing plant in Monterrey as it looks to boost car supply into North and South American auto markets by 300,000 per year.
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, boosting Kia’s total global manufacturing capacity to 3.37 million vehicles.
A total of 1.69 million vehicles will be built at Korean plants, while another 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 US$1 billion ($A1.07 billion) by Kia Motors, the automated manufacturing plant will be situated on a 53.8 million square foot site that will also be home to numerous supplier companies’ facilities.
Kia Motors had 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.
Kia expects the Mexico plant to play a key role in alleviating current global supply issues thanks to its proximity to the USA, which will enable the company to address ongoing supply shortages that have arisen due to the growth of the brand in the US market.
Kia also plans to utilise the plant as a foundation for strengthening Kia’s sales presence throughout Central and South America while freeing up supply from Kia’s domestic plants to address supply shortage issues in other regions of the world.
GM, Volkswagen, Toyota, Nissan and other car manufacturers are already running their manufacturing facilities in the country.
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