Kia Motors Corp. share price up, to invest $1-billion in a Mexico auto assembly plant

Kia Motors Corp. announced that it intends to build its first assembly factory in Mexico. Mr. Enrique Pena Nieto, the companys Mexican President, said in an official statement that Kia plans to invest more than $1-billion in the plant and will attract another $1.5 billion from its Mexican suppliers.

Mr Pena Nieto said: “This company is betting on Mexico, it has confidence in Mexico.” He added, cited by Reuters: “This investment will trigger others, those of their suppliers. We estimate that suppliers will invest another $1.5 billion.”

According to Kias Vice Chairman – Lee Hyoung-Keun, the plant is expected to have a capacity of 300 000 vehicles on a yearly basis and should become operational in the first half of 2016.

Kias new factory is the latest one in a series of investments that are putting Mexico among the most-preferred locations for global auto manufacturers, such as Honda Motor Co., Daimler AG, Nissan Motor Co., Audi AG and others. The decision to build an assembly plant in the region makes Kia the first South Korean car producer to set foot in Mexico.

Several suppliers of Kia are expected to invest in the plants supply network. According to the statement of official representatives, Hyundai Mobis plans to build a module plant located in Mexico, and Mando Corp., which produces steering and braking parts, as well as suspension systems, is also considering to build a plant in the country.

Kia Motors Corp. rose by 1.01% to close at KRW 59 800 per share in Seoul today, marking a one-year change of -8.00%. The car manufacturer is valued at KRW 24.24 trillion. According to the Financial Times, the 32 analysts offering 12-month price targets for Kia Motors Corp. have a median target of KRW 70 000, with a high estimate of KRW 90 000 and a low estimate of KRW 54 000. The median estimate represents a 17.06% increase from the last price of KRW 59 800.