By on June 2, 2014

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Hyundai-Kia will end an unofficial cap on NAFTA-area expansion with a new factory in Monterrey, Mexico.

Reuters is reporting via sources that the new plant will have an annual capacity of 300,000 units, and will build small cars. Hyundai and Kia plants in the United States are running at flat out, and the lack of extra capacity has long been blamed for the inability of both brands to capture more market share in the United States.

While no official announcement has been made, the Mexican plant would allow for more North American capacity, while allowing for less profitable small cars to be made in a jurisdiction with lower labor costs. At the same time, South Korean production is looking less stable, due to labor disputes, a rising currency and higher labor costs. Japanese rivals like Honda and Mazda have already established Mexican production facilities to build similar vehicles.

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14 Comments on “Hyundai-Kia To Expand In Mexico...”


  • avatar
    ppxhbqt

    Wonder if this means that small cars will now be sold under the Hyundai name in Mexico instead of or in addition to the Dodge name?

    • 0 avatar
      Marcus36

      That is a possibility, and with the value/features/running costs that Hyundai and KIA are known for it would be a good brand to have in the Mexican market.

    • 0 avatar
      bd2

      Yes, that would appear so since Hyundai had terminated its agreement with Chrysler/Fiat.

      The expansion of NA production is hardly surprising as H/K both were in need of more capacity.

      The report is that this will be a Kia plant; Kia will probably build the Forte and Soul (since NA is by far the Soul’s largest market – with expanded Soul production, might see one of the Soul variants headed to production).

      Kia still needs more Optima production and Hyundai still needs more Santa Fe Sport/Santa Fe production (which Kia builds for Hyundai at its GA plant) – so might see Elantra production headed to Mexico as well in order to free up capacity at Hyundai’s ‘Bama plant.

    • 0 avatar

      Actually they have started to sell Hyundai Cars under their brand, I live in Monterrey and just saw a big dealership being built for the brand, now not related to Dodge Fiatsler, I will let you know about the factory advances.
      The offer so far is the Ix35, Elantra and i10.

      Saludos from Mty.

  • avatar
    tresmonos

    This isn’t exactly an ideal location for safety’s sake. I wonder if they’re trying to keep their logistics footprint localized to West Point, GA.

    Terrible location if they want to leverage their US man power.

  • avatar
    gmichaelj

    So does anyone here know how much it costs to assemble a car?

    I suppose this is just Final assembly costs that are saved (?)

    At the low end of the market, I suppose a (say) $500 cost could be passed right on to lowering the sticker price which could make a big difference to low-end new car buyers.

    But it would be nice to know how much it costs to say build a Fusion in MI vs one in Ole Mexico (just sayin)

    • 0 avatar
      bd2

      US production would put them at a disadvantage from the start for the Mexico market and Mexican production means no tariff barriers to most of Latin/South America and to Europe (unlike US production) – which is why VW, Audi, Mazda, Honda, Nissan, etc. have all built or expanded production facilities in Mexico.

      • 0 avatar
        highdesertcat

        More importantly, though, expanding production in Mexico means not having to face the never-ending onslaught by the UAW of trying to unionize foreign producers in America.

        The unions in Mexico are different than the UAW. In Mexico the unions are ecstatic that they have jobs. With the UAW there is always the whining about CEO pay, employee profit sharing, more pay for less work, and on and on and on and on, ad nauseam.

        I’m glad Hyundai/KIA chose this route, no matter where the cars are destined for.

        • 0 avatar
          Hillman

          Considering how the southern plants are non UAW I am not sure what your argument is. Also, why are you cheering the demise of American manufacturing jobs.

          • 0 avatar
            highdesertcat

            Hillman, those Southern plants may be non-UAW now but there is an ever-present onslaught by the UAW to get them unionized. Word up on The Truth About Cars! Check out stories on VW and M-B, for a start.

            The UAW has been one of the main forces behind the demise of American manufacturing jobs when they drove GM and Chrysler into the grave. Ford just barely escaped the UAW’s death knell.

            Whenever a foreign manufacturer sets up a plant in the US there is always the whining from the UAW to get them organized, even in Right-To-Work states.

            With manufacturers choosing to set up shop in Mexico, they bypass all that union sh!t and still get to use the provisions of NAFTA.

            It’s too bad that the UAW will not be thankful to foreigners and transplants for providing much needed jobs to Americans, UNLESS the UAW can get a piece of that pie by unionizing those plants.

            The UAW may have been good for individual members but it hasn’t been good for America. They’ve lost more jobs than they have created.

            I see this as a smart move on the part of Hyundai/KIA. I wish more foreign automakers would pick up their toys and move to Mexico. That may keep more Mexicans at home instead of coming over here to suck our resources dry.

        • 0 avatar
          bd2

          And yet, GM is the only automaker that builds a SUBcompact, the Sonic, in the US and profitably at that.

  • avatar
    romismak

    I read year ago that 2 automakers were serious about investing in MExico – BMW and Hyundai ad now 1 after BMW announced NA plant – small BMW´s and Mini´s to produce and now Kia probably will in next weeks annnounce this MExico plant. Last months there were informations about Hyundai considering their 3rd plant in NA – either USA or Mexico i was sure Mexico , i mean USA has no advantage, MExico has cheaper labour, more FTA´s – Latin America and Europe.

    But what surprised me about this news is that it should be KIA plant not Hyundai – i mean it´s not important, because most likely they will produce their cars from both brands anyway, but Hyundai will start MExico operations this summer, they split with Chrysler, but their small cars i10 and 2 more are sold in MExico for years – 1st with Dodge badge, now 2-3 years with Hyundai badge, while Kia has no present in Mexico at all. They could beginn their sales operations there soon, but it´s odd to have plant in coutry where your own cars are not avalaible.

    Also i wouldn´t be surprised if Hyundai will announce their Mexico plant too – so they would have 2 plants in Mexico

    • 0 avatar
      bd2

      True – would seem that it would make more sense for Hyundai to be building a Mexico plant 1st, but it appears Hyundai is focusing on another plant in China (they just finished a new one about a year ago).

      Agreed that a Hyundai plant in Mexico will eventually happen, but I suppose Kia could build one model for them (as they do the Santa Fe Sport in GA).


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