Kia Motors to build $1 billion factory in Mexico

Kia Motors Manufacturing Georgia

South Korea's Kia Motors Corp. has announced that it plans to build a car factory in Mexico. Kia will invest more than $1 billion in the factory with production slated to begin in 2016.  The new plant in Nuevo Leon state, in Northern Mexico, will have the capacity to make 300,000 cars a year.

Reuters confirmed that the Kia Forte would be the first car made at the plant.

Mexico has recently seen an influx of car companies planning to expand or build factories into the country. However, this will be Kia's first factory in Mexico. Most of Kia's four main plant locations are in South Korea. However, Kia has other plants located in Slovakia, China, Vietnam, and the United States.

Last month, Germany's BMW said it will spend $1 billion to build a new luxury car factory in San Luis Potosi state that will start production in 2019 as part of an effort to expand the company's presence in the United States. BMW's announcement came a week after Daimler and Renault-Nissan said they would spend $1.6 billion on a factory in Mexico to make premium compact cars for the Infiniti and Mercedes brands.

"Mexico has acquired unique experience during its integration into global value chains, especially in the automotive industry,'' Mexican President Enrique Pena Nieto said.

Mexico has become a favourite spot for car makers, due in part to its relatively low wages, proximity to the United States and several free trade agreements with 45 countries. It is currently estimated that Mexico produces 1 in 5 cars in North America.