Kia Motors Corp. is set to announce plans to build an assembly plant in the Monterrey area, Mexico, two sources privy with the matter told Automotive News. The announcement will be made at the offices of Mexico's economy ministry, one of the sources said. Another source who was briefed on the plans divulged that the site is expected to be operational in 2016.
News reports had said that Kia will make at least a $1.5-billion investment in the site that will be able to produce 300,000 vehicles annually. A production base in Mexico should allow Kia to improve its ability to supply vehicles to the United States, where its sales and that of Hyundai Motor America have been restricted by limited global capacity in the past two years.
Kia and Hyundai assembly site in Georgia and Alabama are currently operating at or above their official capacity, which means additional site in Mexico would allow the carmakers to build more for the US market.
While it remains unknown which vehicles would be built in Mexico, carmakers have been using the country as a hub for producing small cars. Kia currently builds the midsize Optima sedan and midsize Sorento crossover at its West Point site in Georgia.
Kia could build Forte compact, Soul subcompact or Rio subcompact at the new Mexican plant. The lower labor rates in Mexico allow carmakers to thicken the thin profit they get from small cars sold in the US.