(MENAFN- Qatar News Agency) Oul june 30 (qna) - kia motors corp. korea's no. 2 automaker said monday it plans to build a new production plant in mexico to meet demand in the vast north american market
the company a part of hyundai motor group said it expects a memorandum of understanding (mou) to be signed with the state of nuevo leon that will permit a plant to be built in monterrey
"an mou should be signed next month with construction to start soon after" a corporate source said. once work starts the plant should be able to churn out cars starting from 2016
the monterrey plant not far from the border with the united states will be kia's first production facility in the country. the carmaker operates a plant in west point georgia in the united states as well as having factories in slovakia and china
kia said the plant will have a capacity to make 300000 vehicles annually. it will produce compact soul forte subcompact and picanto minicompact car
the new plant once built will not only expand kia's presence in mexico but ship cars over the border to the united states. mexico has a free trade pact with the us so cars made there are not subject to duties when they are sold over the border
company insiders have said that its georgia plant which makes the optima midsize sedans and sorento suvs has been operating at full capacity for some time. this has adversely affected kia's ability to effectively meet consumer demand
another advantage of a plant in mexico is that it would allow the carmaker to circumvent the appreciation of the korean won against the dollar that hurts earnings and price competitiveness abroad
kia and its larger sibling hyundai motor co. had intentionally put a cap on expanding output since 2012 so as not to be hurt by quality issues that have plagued other carmakers that have engaged in rapid expansion in the past
kia declined to say if the mexican plant signals an official shift in the carmaker's policy stance to concentrate on quality control instead of expansion
related to expansion hyundai motor said that despite some reports no real headway has been made on building a fourth plant in chongqing china
"negotiations are under way with the chinese government but no understanding has been reached so far" the company said in a press release. (qna
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