Kia Motors set to bring top models to Mexico

Kia Motors will begin operating in Mexico next month.

The nation’s second-largest automaker said Wednesday it will open 21 dealerships in 10 major cities, including Mexico City, on July 1, and will offer best-selling models like the Sportage and Sorento SUVs and K3 sedan. The company will also introduce the full-change K5 sedan to the market in the second half of the year. The company added it will increase the number of dealerships to 60 by 2017.

The K3 will be offered tax-free, a benefit given by the Mexican government after Kia agreed to build a production plant in the country. Kia Motors expects the plant to begin operating in the first quarter of next year.

It’s unclear which models will be produced in Mexico, but the plant will have the capacity of about 300,000 vehicles per year.

The company said the K3 will be exported to Mexico after being built in Korea, and the Sorento and Sportage SUVs will be shipped to Mexico after production in European and U.S. plants.

Kia said launching its business in Mexico will boost international sales. Mexico has been considered high-growth market with potential to be a production and export base for many global automakers, but had been unexplored by Kia due to its high tariffs of 20 percent. The Mexican automotive market has been growing consistently, from 990,000 units in 2012 to 1.06 million in 2014, hitting 1.14 million cars last year.

Foreign automakers including GM, Volkswagen, Toyota and Nissan are already operating production lines in Mexico, which became the seventh-largest car producing nation in the world last year at 3.22 million vehicles.

To increase its global share, Kia Motors inked an investment deal with the Nuevo Leon state government in August and started building its plant in October. In March, Hyundai Motor Group Chairman Chung Mong-koo visited the construction site to check on the process and learn about the market.

Industry insiders said entering the new market will help the company overcome recent struggles in exports. Kia had sold 202,044 cars in the global market in May, a 7 percent drop from a year earlier, and total sales through May were 1,265,522 vehicles, a 2.8 percent drop year-on-year. One of the biggest reasons was decreasing demand in the newly industrialized nations including Brazil and India due to the slumping economy.

Kia expects the Sorento and Sportage SUVs to lead sales in Mexico.

“We expect our global market share to increase in the second half,” said a spokesman for Kia Motors.

BY KWON SANG-SOO [kwon.sangsoo@joongang.co.kr]