Kia boosts Mexico production amid US tariff pressures

Seoul [South Korea], September 23 (ANI): Amid pressure from US, auto tariffs that have been in effect for six months, Kia Corp. reported its highest production and sales volumes in Mexico since the COVID-19 pandemic as it shifts its Mexican output toward sales in Latin America rather than US exports, as per a report by Pulse, the English service of Maeil Business Newspaper Korea.

According to Mexico National Institute of Statistics and Geography (INEGI) and industry data on Monday, Kia produced 190,000 vehicles at its Monterrey plant between January and August 2025, up 9.2 per cent from a year earlier. Sales in Mexico topped 72,000 units, the highest since 2020.

Mexico has long attracted global automakers with low labour costs and tariff-free access to the US market under the US-Mexico-Canada Agreement (USMCA). General Motors Co, Ford Motor Co, and Chrysler Corp were Mexico top three producers in 2024, with more than 90 per cent of their output exported to the United States.

However, the country appeal as an export base has declined since it failed to secure a tariff-reduction agreement with Washington. Mexican exports to the U.S. currently face a baseline 25 per cent tariff and even vehicles that meet the USMCA rule-of-origin requirement, which mandates that at least 75 per cent of value be sourced from North America, still face a 15 per cent duty.

Despite this, global automakers are expanding their Mexican production as they reposition plants to target Latin American markets. Toyota Motor Corp., for example, increased its Mexican output by 40.5 per cent in 2025 in a bid to boost domestic sales. Mexico is the second-largest auto market in Latin America after Brazil, with 1.4 million units sold in 2024, or up 9.9 per cent from the previous year. Combined sales in Mexico and Brazil account for 70 per cent of new car sales in the region.

Kia has also stepped up its presence. Production at its Mexican plant rose 9.2 per cent year-on-year, with 25 per cent of output sold in Mexico and 75 per cent exported. Kia now ranks sixth in Mexican market sales, with the share of production allocated to domestic sales increasing by 2 percentage points from 2024.

Kia Mexico plant, which began operations in 2016, was among the hardest hit by U.S. tariffs, forcing the company to halt parallel production of Hyundai Motor Co. Tucson for the U.S. market in April 2025.

The success of the K4 has helped stabilise operations. The K4, positioned as an affordable model, is a compact sedan launched in August 2024 that has broad appeal in both the U.S. and emerging Latin American markets. Since its launch, monthly global sales have averaged 15,000 units, making it Kia second best-selling export model after the Sportage.

Production capacity is sufficient as well. Plant usage at Kia Mexico facility rose from 67.7 per cent in 2023 to 80.4 per cent in the first half of 2025, although it remains the lowest among Kia five global plants, leaving room for further expansion.

Meanwhile, Chinese automakers, largely shut out of the U.S. due to tariffs, are also accelerating their push into Latin America. JAC Motors, which is currently the only Chinese brand with a local plant in Mexico, produced more than 20,000 vehicles from January to August 2025, up 23 per cent from the previous year. (ANI)

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