A new Kia production facility will open in Monterey, Mexico in the first half of 2016, with construction scheduled to begin next month. This new plant will have an annual production capacity of 300,000 vehicles and is said to help Kia’s continuing problems with supply shortages in the U.S. market, where the brand has grown sales considerably in the past few years.
Kia has yet to confirm the models that will be produced in Mexico, but Reuters reports that the plant will produce the Kia Forte compact and the Kia Rio subcompact, with the possible addition of the Kia Sportage compact SUV down the road. Each of these models is currently produced in Korea, and Kia is hoping that this new plant will help increase supply to the U.S. market, as well as the expanding Central and South American markets.
Kia’s only production facility in the U.S. is the company’s West Point, Georgia facility that produces the Kia Sorento and Kia Optima models. Most other models destined for the U.S. are produced in South Korea, standing in direct contrast to sister company Hyundai which produces a much larger percentage of its U.S.-market vehicles at its facilities in Alabama -- including the popular Hyundai Sonata and Hyundai Elantra models.
Kia’s $1 billion investment in this Mexican production facility will also help the company enter into the Mexican auto market, where Kia currently has no presence. Establishing local production facilities is key for avoiding the high tariffs that Mexico imposes on imported cars, and this new plant will help the company leverage its growth plans for the larger Central and South American markets.
Groundbreaking for the new plant is set for late September, with completion scheduled for the first quarter of 2016.