WASHINGTON — Kia Motors Corp. has confirmed that it is considering putting its next overseas assembly plant in Mexico.
A statement from the South Korean auto company in early July was its first official acknowledgement that it is interested in a Mexican assembly plant, following several unconfirmed news reports about the possibility.
For example, a Reuters report citing unnamed sources said in June that Kia planned to break ground “soon” on a plant in Monterrey, Mexico, with an annual capacity of 300,000 units.
“Kia Motors Corp. is currently evaluating various options for the establishment of a new overseas manufacturing plant in order to secure future growth for the brand,” Kia said in its statement. “As a part of these efforts, and to better cope with the ongoing supply shortage situation in the Americas region, Mexico is being considered as a possible location of our next overseas production facility.”
Kia gave no timeline for a decision, and declined to comment further.
“If and when a final investment decision is made, we will make a formal announcement and provide details of the investment plan at that time,” Kia said.
Kia and affiliate Hyundai Motor Co. are facing constraints on their ability to supply the U.S. market, where the companies are losing market share, even as their assembly plants in Georgia and Alabama operate at or above their official capacity.
A new plant in Mexico would ease the unofficial moratorium on new factories set by Hyundai Motor Group boss Chung Mong-koo, who emphasized improving quality and brand reputation, rather than sales growth, following Toyota Motor Corp.'s recall crisis last year, which made the Korean group wary of growing too fast.
A Mexican assembly plant would also add Kia to a growing roster of auto makers investing in production capacity in the country, whose lower labor costs and numerous free-trade agreements make it a potent base for exports.
As reported in early Julyby Automotive News, a sister publication of Tire Business, newly announced or just-opened factories will add an estimated 1.5 million units of vehicle production capacity in Mexico by 2019.
This report appeared in Detroit-based Automotive News.