Manuel de la Torre
General Counsel and Institutional Relations Director
Kia Motors México
View from the Top

Nuevo Leon Reels in Coveted Korean OEM

Tue, 09/01/2015 - 12:44

Q: Why did KIA select Mexico as the location for its new plant?

A: KIA Motors is a company that has consolidated its leadership in the automotive industry globally with more than 70 years of history and a distribution network that covers 180 countries. KIA Motors decided to invest US$1 billion for the construction of its new plant in Mexico, which was mainly based on the competitive manufacturing costs of the country, as well as the country’s multiple FTAs with strategic markets like Canada and the US. KIA is currently the 9th biggest OEM in terms of sales and with this new project the company expects to strengthen its presence in the most important automotive markets. Mexico’s geographical position was also a main factor for attracting this investment, as well as its high-quality production and the talent of the Mexican workforce. Furthermore, the country offers a really favorable environment for the automotive industry, including the most important component suppliers and a well-developed logistics network.

Q: Will your relationship with Hyundai play a role in the Mexican market?

A: Even though both companies belong to the Hyundai Motor Group, we operate as independent players and competitors within the same market. Ever since we arrived to Mexico, we have worked to establish a clear partition between both companies, in order to gain our own position as a new brand. We are offering different products with special characteristics, such as our seven year or 150,000Km powertrain warranty, which is the most extensive one in the Mexican market.

Q: How are you planning to optimize the inclusion of local content and the customization of your vehicles?

A: Mexico has become an international automotive hub where practically all the most important OEMs in the industry are present. This has been possible thanks to a solid supplier network that offers both competitive prices and high-quality components. Our arrival to the country represents an opportunity for KIA and all Mexican suppliers to grow and develop together, and we are fully committed to the development of local providers. Currently we work with 40 suppliers, 20 of which are Mexican, and our goal is to achieve 100% local content by 2020. In terms of the domestic market, we are aware of the needs of our local customers. We are doing tests with different configurations, and we plan to offer engines and transmissions in line with the Mexican roads and driving conditions. KIA Motors has a solid presence in South America, and the arrival of our first plant in Latin America will boost our opportunities in countries like Chile, Colombia, and Peru.

Our global philosophy is based on innovation. This means that every one of our business units is oriented to maintaining the highest quality in our products. This is perfectly shown by our results in the Initial Quality Study done by J.D. Power, which rated KIA as the second highest scoring brand just behind Porsche. Furthermore, KIA was ranked in first place within its own segment, which highlights the clients’ preference toward our products.

Q: What benefits will being a local manufacturer bring to your market strategy in Mexico?

A: KIA wants to promote and help the automotive sector grow in Mexico. In the last years, this industry has become the engine of the Mexican economy, which is now going through a historic moment. According to AMIA, from January to July 2015 the country’s accumulated sales grew at an annual rate of 20.9% to reach 721,539 vehicles. KIA’s presence is definitely going to strengthen these figures and having a local plant will undoubtedly help our operations in the domestic market. Our goal is to reach a market share of 5% by 2020.

Q: How will KIA approach the challenges of attracting and retaining a skilled workforce?

A: We need to train our new Mexican workforce, creating specialists in automotive manufacturing and implementing practices already used in our other plants. For KIA Motors, high quality standards are essential, which is why we have designed all our training programs to last between six and 36 weeks depending on the process. We have now trained more than 500 employees locally, and we have sent some of our people to other plants from the Hyundai Group. We are expecting to receive 45 expats from Korea, and close to 200 more people from our affiliates and suppliers.