Compact to be Mexico factory's 1st product

Kia to boost Forte supply -- in 2016

Compact to be Mexico factory's 1st product

Sales of the Forte compact have grown modestly, trailing Kia's overall performance this year.
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Kia's new plant in Mexico will give U.S. dealers a better supply of the important Forte compact car.

Officially, Kia is evaluating which nameplates it will assemble as part of "a range" of compact models to be built at the plant in Monterrey that Kia announced last week.

But Reuters has reported that the Forte will be the first to be built there. The plant will have annual capacity of 300,000 vehicles and production is to start in the first half of 2016.

Production in North America will be a boon for the Forte, which has underperformed in the massive compact car segment.

Although the Forte was redesigned last year and is available as a sedan, coupe and five-door hatchback, the car's sales have grown modestly, trailing Kia's overall performance this year.

Through July in the United States, Forte sales grew 5 percent to 43,517 units for a 3.2 percent share of the compact-car segment, according to the Automotive News Data Center. In the same period, Kia sales rose 7 percent.

For comparison, Honda sold more than 30,000 Civics in July.

The 2014 Civic starts at $19,180, while the 2015 Forte starts at $16,690. Both prices include shipping.

John Fee, general manager of Koons Kia of Woodbridge in Virginia, said Kia has told him that the new plant will build the Forte. He could use a bigger supply.

The dealership sells about eight Fortes per month, but demand would support an additional 25 per month with sufficient inventory, he said.

Forte shipments sell out within 30 days of arrival, Fee said, leaving him with long waits until the next shipment arrives as potential sales walk out the door.

"We'll build [Forte inventories] up to around 29 and we'll sell out and have like two," Fee said. "They just can't build them quick enough."

Capacity limits have hindered the Forte's volume nationally, said Ed Kim, vice president of industry analysis at AutoPacific.

He said the Forte is a "great compact car loaded with modern style, class-above features -- heated steering wheel and ventilated seats -- and all of the functional goodness of its close relative, the far-better-selling Hyundai Elantra."

The Elantra has one major advantage -- local production. Elantra assembly shifted to Alabama from South Korea in October 2010 when it was redesigned. U.S. sales soon exploded to 186,361 Elantras in 2011, a 41 percent gain from the prior year.

Said Kim: "Building [Forte] in North America could potentially bring its volumes up significantly, giving a much bigger slice of the compact car marketplace." c

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


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