Review of Presence Strategy

The view of Kia Motors plant in Mexico.
The view of Kia Motors plant in Mexico.

 

Hyundai Motor Company and Kia Motors are reviewing their strategy for investment in the North American market with U.S. President-elect Donald Trump’s election pledges including a punitive tariff of 35% on products imported from Mexico.

Earlier, Hyundai Motor Company, which is currently running a sedan manufacturing plant in Alabama, was planning to build another one concentrating on SUVs. The company was regarding Mexico rather than the United States as the most potential candidate in that land and labor costs are lower in the former.

However, Hyundai is reviewing the plan from the beginning now for the reason mentioned above. The KORUS FTA renegotiation, another one of his election pledges, is putting pressure on the company as well. Based on the free trade agreement between the U.S. and South Korea, the export tariff on South Korean carmakers’ automobiles exported to the U.S. dropped from 2.5% to 0% between March 2012 and March this year.

Kia Motors, on its part, is trying to find out the best way of running its manufacturing facilities in Mexico, which have an annual production capacity of 400,000 cars and have been in operation since September this year. At present, Kia Motors is producing 100,000 or so units of the K3 a year in the factory.

 

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