Hyundai, BMW eye Mexico assembly plants, government official says

UPDATED: 9/26/13 6:03 am ET - details added

NEW YORK (Bloomberg) -- Auto production in Mexico, which is already at a record level, may get another boost from BMW AG and Hyundai Motor Co., which are considering building factories in Latin America's second-largest economy, Economy Minister Ildefonso Guajardo said.

The government has held talks with both companies and at least one of them may announce plans for a new assembly plant next year, Guajardo said in an interview in New York on Wednesday.

It would mark Mexico's first new car factory since April 2012, when Audi AG revealed plans for a $1.3 billion plant it started building this year to produce the Q5 SUV.

BMW's top executive in North America told Automotive News last month the company was looking at expanding its manufacturing footprint in the region with a plant in Mexico, but that several things had to happen first.

Hyundai is severing distribution ties with Chrysler Group and plans to establish its own new-car dealer network in Mexico, a sign the big Korean auto group plans to broaden its presence in Latin America.

Hyundai's U.S. sales growth has slowed in part because of tight vehicle inventories and manufacturing capacity constraints.

A BMW or Hyundai factory would further bolster Mexico's auto industry, which set production and export records in 2012 and has continued to expand this year even as the nation's economic growth has slowed.

Nissan Motor Co., Honda Motor Co. and Mazda Motor Corp. are building plants in central Mexico, while Ford Motor Co. and General Motors are investing in additional production.

"With both of them, there have been conversations with us for future plants," Guajardo said in reference to BMW and Hyundai. "I cannot talk for them, but I think that starting 2014 we'll have new announcements. At least for one."

Meeyoung Song, a spokeswoman for Hyundai in Seoul, said the automaker "currently has no plans to build a plant in Mexico."

Elizabeth Solis, a spokeswoman for BMW in Mexico City, did not respond to requests for comment.

Mexican auto output rose 4.4 percent in the first eight months of the year from a year earlier to 1.99 million vehicles, according to the Mexican Automobile Industry Association.

Production last year climbed 13 percent to a record 2.88 million units.

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