Kia confirms interest in Mexico assembly plant

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WASHINGTON -- Kia has confirmed that it’s considering putting its next overseas assembly plant in Mexico.

A statement from the company last week was its first official acknowledgement that it’s interested in a Mexican assembly plant, following several unconfirmed news reports about the possibility.

For example, a Reuters report citing unnamed sources said last month that Kia planned to break ground “soon” on a plant in Monterrey, Mexico, with an annual capacity of 300,000 units.

“Kia Motors Corp. is currently evaluating various options for the establishment of a new overseas manufacturing plant in order to secure future growth for the brand,” Kia said in its statement. “As a part of these efforts, and to better cope with the ongoing supply shortage situation in the Americas region, Mexico is being considered as a possible location of our next overseas production facility.”

Kia gave no timeline for a decision, and declined to comment further.

“If and when a final investment decision is made, we will make a formal announcement and provide details of the investment plan at that time,” Kia said.

Kia and affiliate Hyundai Motor Co. are facing constraints on their ability to supply the U.S. market, where the companies are losing market share, even as their assembly plants in Georgia and Alabama operate at or above their official capacity.

A new plant in Mexico would ease the unofficial moratorium on new factories set by Hyundai Motor Group boss Chung Mong-koo, who emphasized improving quality and brand reputation, rather than sales growth, following Toyota’s recall crisis, which made the Korean group wary of growing too fast.

A Mexican assembly plant would also add Kia to a growing roster of automakers investing in production capacity in the country, whose lower labor costs and numerous free-trade agreements make it a potent base for exports. As Automotive News reported last week, newly announced or just-opened plants will add an estimated 1.5 million units of vehicle production capacity in Mexico by 2019.

You can reach Ryan Beene at rbeene@crain.com. -- Follow Ryan on Twitter


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