Kia Motors starts production at $1bn Mexico plant

MEDELLIN, Colombia (ICIS)–Kia Motors Mexico started operations at its Nuevo Leon automotive production plant, the Korean-headquarted company said late on Monday.

The Kia plant in Nuevo Leon will be the company’s production and exportation base for North and South America, with 80% of production destined for export to 80 different countries, including the US, the company said.

The first model to be produced at the plant will be 100,000 units of the Kia Forte. The plant is expected to produce about 300,000 vehicles/year, the company said.

“Starting production as planned was not easy, we faced obstacles like torrential rains, stronger than any seen in 30 years in Monterrey, and these difficulties revealed a lack of industrial infrastructure in the area,” said Seong Bae-Kim, President of Kia Mexico. “Nevertheless, our goal was to arrive at this historical moment and begin production of high-quality vehicles made in Mexico.”

The plant has the capacity to produce one Kia Forte vehicle every 56 seconds and will consolidate Mexico as a major auto production center globally, Kia said.

Mexico has been very successful at using cheaper labour and trade deals to win billions of dollars in foreign investment from automakers like Ford Motor, which announced plans recently to build a $1.6bn small-car plant in the state of San Luis Potosi.

Mexican domestic automobile production declined by 4.9% in April year on year, the Mexican Automakers Association (AMIA) said earlier this month.

Exports registered an even larger decline of 15.6%, AMIA said.

The declines were because of programmed outages at various plants, said the president of AMIA, Eduardo Solis Sanchez.

The automotive industry is a major global consumer of petrochemicals which contributes more than a third of the raw material costs of an average vehicle. ICIS tracks the movement of petrochemical raw material costs in auto production both globally and regionally with the weighted ICIS Basket of Automotive Petrochemicals (IBAP).

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