Kia to Announce New Auto Factory in Mexico as Rivals Grow

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Bloomberg News by Nacha Cattan and Brendan Case

August 27, 2014

Kia Motors Corp. (000270) plans to build its first assembly plant in Mexico as the South Korean automaker follows European and Asian rivals in adding regional production.

Mexican President Enrique Pena Nieto is announcing the project at 11:30 a.m. in Mexico City, according to a government statement. The investment probably will top the 1 billion euros ($1.3 billion) for a Daimler AG-Nissan Motor Co. factory unveiled in June, said a person with knowledge of the matter.

Kia’s commitment expands on Mexico’s auto-manufacturing prowess. The nation’s output is poised to surpass 3 million vehicles this year for the first time, according to the Mexican Automobile Industry Association, buoyed by plant openings since November for Nissan, Honda Motor Co. (7267) and Mazda Motor Corp.

“Having a Korean company enter Mexico will mean that practically all global automakers will be represented in the country,” Armando Soto, president of Kaso y Asociados, a Mexico City-based auto industry consultant, said in a telephone interview. “It will also trigger large investments from Korean auto-parts companies.”

The statement from Pena Nieto’s office didn’t spell out what models would be produced at the factory. It will be in Pesqueria, near Monterrey, a second person with direct knowledge of the matter said. That would make Seoul-based Kia the first automaker with an assembly facility in Nuevo Leon state, based on a tally compiled by the automobile trade group.

Scott McKee, director of corporate communications for Kia Motors America, declined to comment ahead of today’s announcement.

Kia is partly owned by Hyundai Motor Co. (005380) Economy Minister Ildefonso Guajardo said last year that Hyundai was among automakers considering building a Mexico plant.

Bayerische Motoren Werke AG followed the Daimler-Nissan announcement by saying last month that it would spend $1 billion on a new Mexican factory.

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