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Kia Motors To Build $1 Bln Car Assembly Plant In Mexico

South Korean automaker Kia Motors Corp. (KIMTF.PK) said late Wednesday that it has agreed to build a $1 billion car assembly plant in Mexico by 2016. The company noted that the plant will enable it to secure local production base to meet global demand for new vehicles.

Kia Motors said that it has signed an investment agreement with the Mexico government to build a manufacturing plant in Monterrey, which is located in the northeastern Mexican state of Nuevo León. Kia Motors, partly owned by Hyundai Motor Co., plans to produce "a range of yet-to-be confirmed compact models at the new plant".

The company expects to commence construction of the plant in September 2014 and to complete the construction in the first half of 2016.

The plant will have an annual production capacity of 300,000 compact cars, thus boosting Kia's total global manufacturing capacity to 3.37 million vehicles. This includes 1.69 million vehicles at the company's domestic Korean plants and 1.68 million at its overseas plants.

The new, highly automated manufacturing plant will be situated on a 500 hectare site that will also be home to numerous supplier companies' facilities.

Kia Motors said that Mexico was chosen as the site for the company's next overseas plant as it is one of the few remaining major markets of the world in which Kia does not have a sales presence.

The company added that Mexico is well-known for its skilled, low-cost labor force and numerous free trade agreements with about 40 countries. Mexico is the fourth-largest auto exporter in the world.

Kia Motors noted that Mexico's proximity to the U.S. will enable the company to better address the ongoing supply shortage situation that has arisen due to the growth of the Kia brand in the U.S. market. The company also plans to utilize the Mexican plant to strengthen the brand's sales presence throughout the entire Central and South America region.

Hyoung-Keun Lee, Vice Chairman of Kia Motors, said, "We are committed to producing world-class quality vehicles here in Mexico that feature industry-leading styling and high-tech convenience and safety features that customers have come to expect from Kia, while making significant contributions to both the economic growth of the State of Nuevo León and the future development of the Mexican automotive industry."

In Thursday's trading on the Seoul stock exchange, Kia Motors stock is trading at 60,200 won, up 400 won or 0.67 percent on a volume of 347,376 shares.

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