Hyundai Mobis, an affiliate of Hyundai Motors and Kia Motors, has signed a deal to build a USD417.71 million factory in Mexico. The plant will meet demand for Hyundai and Kia production, according to a Reuters report. The Hyundai Mobis plant is due to be constructed near the city of Monterrey in the state of Nuevo Leon. Production of automotive modules and lamps is planned to start in 2016. Separately, Hyundai Wia announced an investment of USD371.25 million in a plant to make engines and other automotive parts in Mexico.
Significance: Kia confirmed its plans for a USD1 billion plant in Mexico in 2014, which is encouraging the investment by related suppliers. Additionally, Hyundai and Kia have plants in the US in Georgia and Alabama, with potential for these plants to supply those as well. IHS forecasts that Hyundai’s production will increase from 5.8 million units in 2012 to about 6.4 million by 2019. North American output will grow from 718,648 units in 2012 to 1.1 million in 2018 and to 1.23 million in 2021. In 2021, we forecast North America will produce 18.3% of the company’s output, followed by Europe’s 17.6%. South Korea remains the company’s primary production source, though by 2021 accounts for 48.8% of production, down from 60.8% in 2012, as Hyundai’s growth includes building more products closer to where the vehicles are sold, as well as offering some protection against risk related to strikes by the South Korean workforce. The company’s increased production capacity will also include new plants in China. Against this backdrop, we may see more investment from Hyundai’s suppliers as well.
