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.