A recent Automotive News article says a new Kia Mexico plant is in the works. The article sites two “in-the-know” sources who say the automaker is set to break ground on a new assembly plant in Monterrey in the near future.
This comes as a mild surprise to some. Approximately two years ago, Hyundai-Kia Chariman Chung Mong-Koo put a temporary halt to expansion after watching the growing pains its rival Toyota went through when it attempted to grow too fast during the 2000s.
An Obvious Need for a Kia Mexico Plant
But one of the sources said Kia had begun to change its mind early this year, doing feasibility studies in several areas including Mexico. Why the need for a new Kia Mexico plant? It’s a simple matter of supply and demand. Kia’s lone plant in the United States (in West Point, GA) is currently running at full capacity, and the company doesn’t want to risk any future constraints as they continue growing.
The Georgia plant currently produces the Kia Optima mid-size sedan and Sorento SUV; as well as the Hyundai Santa Fe SUV. Hyundai also has an additional plant in Alabama. Even as both these plants run at full capacity, they are still having difficulty keeping up with the demand as the economy continues to rebound.
Kia Mexico Plant Details
The sources told Reuters that the new Kia Mexico plant is expected to have a capacity of 300,000 cars per year, and it would initially build two small car models. Construction of the factory is expected to take about 21 months.
Some industry analysts are already touting this as a smart move for the company, as they surmise that if they cannot increase production in the coming years, it will actually result in a reduced market share. Mexico also makes sense from a financial standpoint, as building cars closer to where they will be sold assists in keeping overall costs down.
Combined, Hyundai-Kia are the fifth-largest global automobile seller.