According to two people with knowledge of the automaker’s plans, Kia Motors is close to breaking ground on its first Mexico production facility, adding capacity for the North American region.
The plans are a sure sign that together with its Hyundai Motors partner, the South Korean automakers are ready to shed an unofficial capacity growth cap, with the new facility, to be built in Monterrey, ready to ease up the constraints on the maker’s lone US plant – which runs at full swing now. The new plant should have an annual capacity of 300,000 units and initially churn out two small cars, according to one of the persons.
“Hyundai and Kia are now more flexible with building new plants as their global manufacturing capacity has reached limits,” said Suh Sung-moon, an auto analyst at Korea Investment & Securities. “Without new factories, the duo is expected to lose market share in 2016 for the first time in over a decade.”
While Hyundai has a lone plant in the US, in Alabama, Kia’s single factory in the region is currently running at full capacity, producing the Optima mid-sized sedan and the Sorento sport utility vehicle (SUV), next to Hyundai’s Santa Fe – with both plants overrun by consumer demand in the recovering US market, according to company executives.