Kia aims to use Mexico as beachhead for Latin America
Hyundai Motor Group Chairman Chung Mong-koo, right, shakes hands with an employee at the construction site for Kia Motors’ new plant in Monterey, Mexico, Thursday. / Yonhap
By Lee Hyo-sik
Hyundai-Kia Group Chairman Chung Mong-koo visited the construction site for Kia Motors’ new plant in Mexico, Thursday, saying the facility will serve as the automaker’s strategic base for Central and South America.
The facility, capable of producing 300,000 vehicles a year, is scheduled to open in the first half of 2016 and churn out K3 sedans, called the Porte abroad, for Mexico and South American countries.
Prior to coming to the site in Monterey, northeastern Mexico, Chung visited the group’s U.S. sales headquarters and design center in California, reviewing its business strategies for the year. Chung will fly to the southern United States today to tour Hyundai Motor’s plant in Alabama and Kia Motors’ plant in Georgia.
“Kia Motors’ Mexico plant is part of our efforts to more effectively compete with rivals and secure new growth engines,” Chung said. “We need to successfully complete the construction of the Mexican plant and turn it into a globally-competitive, strategic base for rapidly growing automobile markets in Central and South America.”
The chairman then stressed the importance of Kia’s localization there, saying that the carmaker should develop vehicles tailored to Mexican consumers, and introduce innovative sales and marketing campaigns.”
Automakers operating in Mexico produced a combined 3.22 million cars in 2014, making the nation the world’s seventh-largest producer. Over 1 million vehicles were sold last year.
According to Kia Motors, Mexico is an ideal place for producing automobiles, thanks to relatively low wages and its geographical proximity to the United States, Canada and Central American nations.
It signed the North American Free Trade Agreement with the United States and Canada, meaning that automakers in Mexico can export cars to the two countries duty-free.
Nissan, General Motors, Chrysler and other multinational automakers have been rushing to set up plants in Mexico over the past few years.
“When we complete the Mexican plant next year, we will use it as an export hub for North and South America,” a Kia Motors’ spokesman said. “The plant will also bring about positive effects on the domestic automobile industry. We will purchase welding robots and other plant facilities from our business partners back home.”
Dozens of auto parts makers and other business partners have been setting up a presence near Kia’s plant, creating hundreds of new jobs, the automaker said.
The planned Mexican plant is expected to increase the firm’s annual global production capacity to 3.37 million cars, Kia said, adding it will help boost sales in Mexico.
“Hyundai Motor’s sales in Brazil soared after its plant there began operating in 2012. In 2014, it sold 360,000 cars, double the 180,000 in 2012. We expect this will happen in Mexico too,” the spokesman said.
Kia also plans to increase shipments from Korea to Mexico this year as it can export 30,000 vehicles duty-free. Foreign carmakers are allowed to export 10 percent of their output to Mexico duty-free.
In 2014, the automaker sold a total of 160,000 vehicles in Mexico, and Central and South American nations, up 4.1 percent from 2013.