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Kia Plant In Mexico To Produce Compact Cars
Kia Motors officially announced that their new production plant in Monterrey, Mexico will be used to make a range of small cars for a number of markets, including the US.
Production at the $1 billion plant will begin in the first half of 2016.
What they did not say is what cars will be made there, choosing instead to issue a statement saying that “a range of yet-to-be confirmed compact models” would be what was on tap.
That said, Reuters reported that unnamed sources from within Kia have said that the Forte compact would definitely be on the list, while the Sportage compact crossover was also being considered.
In the US, the Kia compact line-up consists of the Forte, Sportage, Rio, and the Soul, which also happens to be Kia’s second best performing vehicle in the country.
The Plant Will Start Operating In 2016
Construction of the new Kia plant is slated for late September, with the first cars expected to roll off the production line in early 2016.
Annual capacity is set to be 300,000 units.
The capacity is good news for Kia, as they expect it to help with some of the supply issues that they have been experiencing in the US market due to the growing popularity of the brand.
The Monterrey, Mexico car manufacturing plant will also act as a base to better serve countries in Central and South America. The extra capacity will also relieve some of the strain put on production plants in Korea, allowing to focus on other parts of the world.
Official Signing Ceremony
The announcement of Kia’s plans came after an official signing ceremony to complete the deal.
The signing took place in Mexico City, with Enrique Peña Nieto, president of Mexico, and Hyoung-Keun Lee, vice chairman of Kia, as well as some other executives and officials present at the event.
Mexico is fast becoming a hub for automakers and small car production. Part of the reasoning is that the lower labor rates help offset the small profit margin that automakers have in the US market.
Among the other automakers with a plant there, or with one in the works, are Mazda, Nissan, and Honda.
The fact that Mexico has free-trade agreements with more than 40 different countries also makes it a good place to do export business.
Kia has also hinted that they might be open to putting a sales channel in Mexico, as they are always looking for new potential growth markets.
A local manufacturing plant would certainly be the first step to making that happen, as tariffs on imports from Korea are just too high at the moment.