Kia confirms $1B factory in Mexico to be completed in 2016

Fri, 29 Aug 2014

Kia is the latest in a string of automakers to announce plans to build new or expanded factories in Mexico. The Korean company has signed a $1 billion deal to establish a plant in Monterrey in the state of Nuevo León, with construction starting in late September. If everything proceeds on schedule, the facility should be complete in the first half of 2016 and be able to produce 300,000 vehicles a year.

The $1-billion investment will create a "new, highly automated manufacturing plant," according to Kia's announcement, a facility covering 1,235 acres of land. Confirming earlier rumors, Kia will produce compact models there, but the company won't reveal specific model names, just yet. When complete, the factory in Mexico will boost the automaker's annual capacity to 3.37 million vehicles a year with 1.69 million of those in Korea and 1.68 million abroad. It will also join Kia's plant in Georgia (where the Optima and Sorento are made) as the business' other North American location.

Kia hasn't kept plans for the Mexican factory a very close secret and openly admitted it was "being considered as a possible location" to Autoblog. The country was chosen partially because of its free-trade agreements (read: NAFTA), that make it less costly to move models elsewhere, not to mention its easy access to the North, Central and South American markets. The new plant should also alleviate some of the tight supply issues Kia has had in the US.

Mexico has become a hotbed of auto manufacturing as of late. Just this year, Mercedes-Benz and Infiniti announced a joint-venture plant there, and BMW revealed its own plans for a $1-billion factory. Scroll down to read Kia's full announcement of its $1-billion investment south of the border.

Kia Motors signs US$1 billion investment agreement for establishment of manufacturing plant in Mexico

- Ceremony attended by key executives of Kia and the President of Mexico

- Actual construction planned to commence in late September

- 300,000-unit annual capacity plant to bring Kia's total global manufacturing capacity to 3.37 million cars per year

(SEOUL) August 28, 2014 – Kia Motors Corporation announced today that it has signed an investment agreement with the Mexico government to build a state-of-the-art manufacturing plant in Monterrey which is located the northeastern state of Nuevo León.

The official investment agreement signing ceremony was held on August 27th (local time in Mexico) 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 (Hank) 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 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.

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. 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.

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."

About Kia Motors Corporation
Kia Motors Corporation (www.kia.com) – a maker of quality vehicles for the young-at-heart – was founded in 1944 and is Korea's oldest manufacturer of motor vehicles. Over 2.7 million Kia vehicles a year are produced in 10 manufacturing and assembly operations in five countries which are then sold and serviced through a network of distributors and dealers covering around 150 countries. Kia today has around 48,000 employees worldwide and annual revenues of over US$43 billion. It is the major sponsor of the Australian Open and an official automotive partner of FIFA – the governing body of the FIFA World Cup™. Kia Motors Corporation's brand slogan – "The Power to Surprise" – represents the company's global commitment to surprise the world by providing exciting and inspiring experiences that go beyond expectations.

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By Chris Bruce