Kia confirms possibility of new manufacturing site in Mexico

Article by Christian A., on July 9, 2014

Kia has confirmed in a statement that is considering building its next overseas assembly site in Mexico. The confirmation comes following several unconfirmed news reports about the possibility of Kia setting assembly operations in the country.

For instance, Reuters reported in June, citing unnamed sources, that Kia planned to break ground “soon” on a plant in Monterrey, Mexico, with an annual production capacity of 300,000 units. Kia said in its statement that it is currently evaluating various options – including a site in Mexico -- for the establishment of a new overseas site to secure future growth for the brand.

Kia provided no timeline for a decision. Kia said in the statement that it will make a formal announcement and provide details of the investment plan if and when a final investment decision is made.

Both Kia and Hyundai have their US plants in Georgia and Alabama operating at or above their capacity levels, which means that the affiliates does not have enough ability to cater to the growing demand for light vehicles in the country, causing them to lose market share.

A new manufacturing in Mexico would ease the unofficial moratorium on new sites set by Hyundai Motor Group chairman Chung Mong-koo. The chairman has focused on improving quality and brand reputation, instead of sales growth, after Toyota’s recall crisis made the South Korean carmaker wary of growing too fast.

Should it decide to build a plant in Mexico, Kia would join hordes of carmakers investing to set manufacturing footprint in the country, which has become an attractive proposition thanks to its lower labor costs, proximity to the US and numerous free-trade agreements.

Automotive News reported last week that newly announced or just-opened sites will add around 1.5 million units of production capacity in Mexico by 2019.

Topics: kia, mexico, production

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