A Kia Motors Mexican investment worth $1 billion has been announced by the South Korean vehicle manufacturer. The company says it has signed an investment agreement with the government of Mexico to build a new car factory in Pesquería, near the city of Monterrey, Nuevo León, Northern Mexico.
The agreement was signed at MUTEC (Technological Museum of the Electricity Federal Commission) in Mexico City on August 27.
It was attended by Mexican President Enrique Peña Nieto, the Governor of the state of Nuevo Leon, Rodrigo Medina de la Cruz, and Kia Motors Corp Vice-Chairman Hyoung-Keun (Hank) Lee.
300,000 capacity
Construction of the new car factory will start at the end of September 2014. The company estimates it will be completed in H1 2016 and will have a capacity of 300,000 vehicles annually, boosting Kia’s total worldwide manufacturing capacity to 3.37 million, including 1.69 million in South Korea and 1.68 elsewhere.
Kia Motors says it plans to produce compact models at the Monterrey plant – this will be confirmed later.
The company chose Mexico because it is “one of the few remaining major markets of the world in which Kia does not have a sales presence.”
Kia cars imported into Mexico from Korea are subject to high tariffs. To compete effectively in the Mexican domestic market it needs to establish local production.
Hyoung-Keun Lee (left), President Enrique Peña Nieto (middle), Rodrigo Medina de la Cruz (right). (Photo source: Mexican President’s website)
Mexico a good choice, says Kia
Regarding Mexico, Kia wrote:
“Mexico is well-known for its skilled, low-cost labor force and numerous free trade agreements (such as NAFTA) with about 40 countries.”
With the new factory being located near the United States, it will play a major role in alleviating global supply issues – a growing problem since the Kia brand has been gaining increasing market share in the US.
Kia also believes that by establishing itself in Mexico, it can strengthen the brand’s sales presence throughout the Latin American region, while at the same time freeing up supply from its Korean plants to address shortage problems in several regions of the world.
Mr. Lee 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.”
President Peña Nieto said:
“Our country is getting stronger, and is strengthening its presence in higher value added activities. Thanks to the talent of our young highly skilled and entrepreneurial citizens, we have successfully entered the fields engineering, development and the automotive industry. Mexico has become one of the most competitive platforms to produce and export vehicles and parts.” (Nuestro país se está fortaleciendo, o está fortaleciendo su presencia en actividades de mayor valor agregado. Gracias al talento de nuestra gente joven, emprendedora, altamente capacitada, hemos ingresado con éxito en las áreas de ingeniería, desarrollo y de la industria automotriz. México se ha consolidado como una de las plataformas más competitivas para producir y exportar vehículos y autopartes.)
According to Mexican newspaper El Financiero, during the past few months automakers have announced $10 billions’ worth of investments in Mexico, which will generate 28,000 jobs. In July, BMW also announced a $1 billion Mexican investment.
