South Korea joins wave of carmakers heading for Mexico

Kia Motor Corporation plans to spend more than $1bn setting up its first car assembly plant in Mexico, and it’s not the first.

The South Korean firm is the latest in a wave of automakers, including Mazda, Daimler, Honda, BMW and Renault, who have launched operations in Mexico in recent months, after Mexico’s historic opening of its previously nationalised oil-and-gas market.

Proponents of the move say that opening up Mexico’s large hydrocarbon reserves to private-sector  producers will increase production, drive down the price of electricity – currently around twice as high as in the US – and cause a manufacturing boom.

Kia’s project is expected also to attract a further $1.5bn in investment to Mexico from its supply chain.

The plant, in Pesqueria, near Monterrey, is due to be completed by the first half of 2016 and will produce an estimated 300,000 cars per annum, reports say.

$10bn of new automotive projects have been announced in the country since President Enrique Peña Nieto came into office 20 months ago, Mexican officials have said. 

"This company is betting on Mexico, it has confidence in Mexico," the president said at the Kia announcement, adding, "Mexico has acquired unique experience during its integration into global value chains, especially in the automotive industry."

Kia is the first South Korean car manufacturer to enter South America. It has four plants in South Korea, and one each in Vietnam, Slovakia, China and the US.

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

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