Mexico Plant Aims to Raise Kia’s Americas Profile

Hyundai Motor Group Chairman Chung Mong-koo visits Mexico to inspect construction progress on a new Kia plant near Monterrey.

He confirms the Hyundai Group affiliate will build the Forte compact sedan at the $1 billion plant beginning in second-half 2016. Long-range plans for the 300,000-unit-capacity facility involve growing market penetration in Mexico, exporting vehicles to markets in Central America and supporting Kia and Hyundai operations in the U.S. through exports.

Hyundai Group’s investment in Mexico is “one of the most strategically important decisions made to secure a new growth engine and survive in the tougher global competition,” Chung says.

While visiting Hyundai and Kia facilities in California earlier in the week, Chung told employees both automakers face fierce competition caused by continuing depreciation of the yen and euro and the increasing inroads into car markets by SUVs and pickup trucks offered by competing American, Japanese and European brands.

The chairman declined to say in Monterrey whether Hyundai would launch a pickup in the North American market. But Chung said, both in Korea before he left for the U.S., as well as in Mexico and in California, that Hyundai Group needed to increase its share of the SUV market and improve competitiveness in the car sector before a pickup could be considered.

Hyundai Group forecasts a 14.4% increase in the SUV market in the U.S., and strongly desires a bigger share of it.

To achieve the growth goals, Chung told employees and local management the highest possible level of product and process quality had to be achieved at every stage, from concept planning through production and delivery of the vehicles.

Hyundai Group sources in Seoul say the combined 2015 U.S. sales target for Hyundai and Kia is 1.41 million vehicles, an increase of roughly 8% over the previous year in a market they think will grow just 2%.