By on August 10, 2016

2017 Kia Forte Sedan

When the new Kia factory in Nuevo León, Mexico reaches full capacity, 300,000 vehicles will leave the plant each year. At the same time, a jail cell door could slam on the government officials who brought it there.

The former governor of the Mexican state will stand trial on corruption charges linked to the tax deal behind the $1 billion assembly plant, Reuters reports. Prosecutors accuse Rodrigo Medina, along with 30 officials, friends and family members, of draining $196 million from public coffers.

Production at the plant is already underway, with 100,000 vehicle expected in its first year of operation. In 2014, Medina’s Institutional Revolutionary Party negotiated a very sweet deal with Kia to land the plant. Under the plan, the automaker receives a tax break amounting to 28 percent of the amount it invested in the facility. The plant, located near Monterrey, is Kia’s only presence in the country.

It is alleged that Medina and friends siphoned the money while negotiating the tax deal with Kia. Current governor Jaime Rodriguez wanted the deal renegotiated, and soon got his way. In June, his Independent Party government cut Kia’s tax break to 10.5 percent.

Despite the allegations, Medina maintains his innocence. Entering the courtroom yesterday for a pre-trial hearing, the ex-governor said, “We haven’t committed any crime and we are going to prove that,” according to Mexico News Daily.

Once in full production, Kia’s Mexico factory will supply 10 percent of the automaker’s new vehicles, with 60 percent of the production bound for the U.S. and Canada. The factory builds the Forte and a smaller, locally sold model.

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11 Comments on “Kia’s Mexico Factory Boosts Car Production, Spawns Corruption Trial...”

  • avatar

    The only advantages to building in Mexico instead of Korea are proximity to the North American market, low wages and land availability.
    The level of corruption is astounding, and every parasite that can milk the system or the Koreans will take what they can every step of the way. It’s unfortunate that Mexico is still worsening as the years to on, instead of improving.
    If we could only hear the details of what Honda and Ford have had to do to keep the products flowing and in one piece… the stories would be both fascinating and horrifying.

    • 0 avatar

      Probably why some manufacturing is leaving Mexico and coming back to the US in recent years. Far too unstable down there, between the ongoing civil war and nonstop graft. Especially when you have a long supply chain, disruptions at one supplier can make it difficult to get a finished product to market.

  • avatar

    How are all these auto makers gonna get their products to the US when the Wall goes up?

  • avatar
    SCE to AUX

    I thought Tesla was the only recipient of corporate welfare.

    But since the taxpayers of Mexico are footing this bill (or not gaining revenue),
    + the mfr is Korean,
    + they don’t really make EVs,
    + they use conventional sales channels,
    + their CEO is anonymous
    = nobody north of The River cares.

    • 0 avatar

      I can’t think of a recent auto plant that didn’t receive many millions in incentives. The Kia plant in West Point, GA, received $400 million worth of incentives on a $1.2 billion plant:

      VW has received $200,000 in incentives per worker for its Chattanooga plant:

      Hell, Porsche received $2 million to move its headquarters from one side of Atlanta to the other.

      • 0 avatar

        It’s funny that we think of Mexico as so corrupt when we’re far better at corruption. We just make it legal.

        • 0 avatar

          “I thought Tesla was the only recipient of corporate welfare.”

          A. They are not

          B. They didn’t receive large bailouts like 2 out of 3 of their American peers

          • 0 avatar
            SCE to AUX

            Yes, I know this. Substituting “Tesla” for Kia would have generated more clicks, and sympathy for Mexican taxpayers.

          • 0 avatar

            Ford also got corporate welfare, not only from the Feds but from local/state govts. – but that’s the norm.

            Toyota is getting $40 million from Texas for moving their HQ from California.

            Mercedes got $$ from GA to move their HQ to Atlanta.

            And pretty much all automakers get tens of millions of incentives to build a new factory or to expand one as states bid against each other.

            Anyhow, as stated earlier, Kia’s Mexico plant having started production is the reason for the rise in Forte sales in the US (despite being an older model in a market swinging even more so to crossovers and SUVs) – as it had been supply constrained.

  • avatar
    Jeff S

    How are all these auto makers gonna get their products to the US when the Wall goes up?

    Easy, the El Chapo Way which is being widened as we speak.

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