A new report finds that Kia will soon begin work on its first plant in Mexico as the South Korean company and its affiliate, Hyundai, look to resolve capacity constraints and keep pace with U.S. market growth.
Citing anonymous sources close to the situation, Reuters reports that Kia’s new facility will be located in Monterrey. It will produce two small models and possess an annual production capability of 300,000 units.
Should the report prove accurate, it could provide another signal that Hyundai and Kia are ready to abandon their unofficial moratorium on production capacity expansion.
In 2012, Hyundai chairman Chung Mong-koo implemented an output freeze amid concerns that the companies’ rapid growth could adversely affect quality. But now, with many of Hyundai and Kia’s factories running at – or above – capacity, it appears that a new phase of building might be underway.
Hyundai officially announced in March that it will create a new factory in Chongqing, China, to keep up with ever-increasing demand in the country. The Mexico plant could be the next step in the growth plan.
“Hyundai and Kia are now more flexible with building new plants as their global manufacturing capacity has reached limits,” Suh Sung-moon, an auto analyst at Korea Investment & Securities, told Reuters. “Without new factories, the duo is expected to lose market share in 2016 for the first time in over a decade.”
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