On Wednesday, Kia Motors Corp. announced that by 2016, it will build a car assembly plant in Mexico. The plant will help Kia Motors make a foothold in Mexico’s local production market and that in turn help the company to converge worldwide demand for new cars.
Kia Motors is one of the leading automobile companies in South Korea. More than 30% of Kia Motors’s stocks are owned by Hyundai Motor Company. The company has total assets worth of $35.6 billion and in 2013, posted a net income of $3.8 billion. The plant will cost $1 billion and it will be built in the vicinity of the city of Monterrey.
The company said an investment agreement between Kia Motors and Mexico Government has already been signed. The site Monterrey is located in Northeast Mexico and Kia Motors will produce “a range of yet-to-be-confirmed compact models at the new plant.” The construction of the plant will not be delayed; Kia Motors wants the construction to start in September 2014 so the work could end by the first half of 2016.
The annual production capacity of the plant will be 300000 compact cars. The global manufacturing capacity of Kia Motors is 3.37 million cars. Of this, 1.69 million cars are manufactured in South Korea’s domestic units. Rest 1.68 million vehicles are produced across its overseas manufacturing units, which means when the plant will be operational, it will contribute to almost 17% of the company’s total global production.
The upcoming automobile plant will occupy almost 500 hectares of land. The site is also the home of many other commercial units, many of which are facilities of supper companies. The reason Mexico has been chosen to set up a new plant is that it is one of the countries where Kia Motors doesn’t have a presence. Also, there are highly skilled and low-cost labours in Mexico and Mexico is the fourth-largest auto exporter in the world.
Since Mexico is near to the US, Kia Motors can meet the demand of new compact vehicles in the US market. The vice chairman of Kia Motors, Hyoung-Keun Lee said in this regard “We are committed to producing world-class quality vehicles here in Mexico that feature industry-leading styling and high-tech convenience.”