Kia Motors announces plan for its first car factory in Mexico

MEXICO CITY — South Korea’s Kia Motors Corp. said Wednesday it will invest more than $1 billion to build a car factory in northern Mexico that is expected to begin production in 2016. The company said the new plant in Nuevo Leon state, across the border from Texas, will have the capacity to make 300,000 cars a year.

Kia’s announcement follows several by other car companies planning to expand or build new factories in Mexico.

Last month, Germany’s BMW said it will spend $1 billion to build a new luxury car factory in San Luis Potosi state that will start production in 2019 as part of an effort to expand the company’s presence in the United States. BMW’s announcement came a week after Daimler and Renault-Nissan said they would spend $1.6 billion on a factory in Mexico to make premium compact cars for the Infiniti and Mercedes brands.

Kia vice chairman Lee Hyoung-Keun said this will be the company’s first car factory in Mexico. Kia has five others car factories outside South Korea.

“Mexico has acquired unique experience during its integration into global value chains, especially in the automotive industry,” Mexican President Enrique Pena Nieto said.

Mexico is a favourite spot for car makers, thanks in part to its relatively low wages, proximity to the United States and several free trade agreements with 45 countries.

© 2014 The Canadian Press