Kia's Mexico Factory Boosts Car Production, Spawns Corruption Trial

Steph Willems
by Steph Willems
kias mexico factory boosts car production spawns corruption trial

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.

Join the conversation
7 of 11 comments
  • SCE to AUX SCE to AUX on Aug 10, 2016

    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.

    • See 4 previous
    • Bd2 Bd2 on Aug 13, 2016

      @VoGo 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.

  • Jeff S Jeff S on Aug 10, 2016

    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.

  • Syke Congratulations on not mentioning the political possibility. I'm sure that during the reading of the article, I'm not the only one noticing the states primarily listed are primarily considered conservative states. And they're not all states bordering Canada.
  • Redapple2 I want my 5 minutes bck
  • Paul Alexander I'd love to buy a car without infotainment.
  • EBFlex Chrysler has the best infotainment by far. The older uConnect system was bulletproof and never had issues. The newer one based on android auto is a big step backward but it's still very good. Nothing else comes close to Chrysler's infotainment.
  • EBFlex People don't want compromises. They want a vehicle that will match what they have now with ICE which includes very short refueling times, long range, and batteries that don't degrade over a rather short time. In the midwest, people don't live on top of each other. People like their space and are spread out. 30+ mile commutes are common. So is outdoor living which includes towing.Government cars make sense for the coasts where people love to live on top of each other and everything is within walking distance. They don't make sense in areas where it's cold and 40% of your range could be lost. Government cars are just not viable right now for the majority of people and the sales reflect it.