The development was so important to Mexico's economy that the president made the announcement himself. On the same day that General Motors Co. (NYSE:GM) said it would be calling home Cadillac SRX crossover production from Mexico in a deal worked out with the United Auto Workers union, South Korean automaker Kia Motors Corp. (KRX:000270) said it will spend more than $1 billion to construct its first auto manufacturing plant in Mexico, according to the Spanish-language El Financiero news agency.

President Enrique Peña Nieto delivered the news Wednesday in Mexico City, highlighting the country's determination to attract automotive investment.

“The Kia plant in LaGrange, Georgia, is working at capacity, and they had a choice to expand capacity there or follow what the industry has been doing in recent years,” Dean Barber, founder of Barber Business Advisors, a corporate site-selection adviser, told International Business Times by phone after the announcement was made. “Kia is building at the doorstep of the United States. Another good thing about that is Mexico has more free trade agreements than the United States, about 40.”

Bordering the world’s second-largest auto market to its north, Mexico has long been an ideal location for car manufacturing, especially after Canada, the U.S. and Mexico began dismantling protective trade barriers starting in 1994 with the North American Free Trade Agreement. At the time, Mexico produced a little more than one in 20 cars in North America; the most recent figures from the INEGI, the country’s statistics and census bureau, puts that figure at closer to one in five.

“Having a Korean company enter Mexico will mean that practically all global automakers will be represented in the country,” Armando Soto, president of Kaso y Asociados, a Mexico City auto industry consultant, told Bloomberg Businessweek.

Automakers have been attracted to Mexico’s low labor costs to produce small sedans, which offer slim profit margins compared to trucks, SUVs and luxury cars. In February, Honda Motor Co. Ltd. (TYO:7267) began making its Fit at a new $800 million plant in Celaya, Guanajuato state, marking the first time the five-door subcompact – popular among price-conscious empty nesters and first-time new-car buyers – is being built in North America. In February, Mazda Motor Corp. (TYO:7261) opened its first wholly owned plant in North America, a $770 million facility in Salamanca, Guanajuato state, that can make as many as 175,000 Mazda2 supermini cars and Mazda3 compacts.

“The Forte compact, Soul subcompact or Rio subcompact could be among the possibilities to be built [at the Kia plant],” reported Automotive News. Reuters confirmed Wednesday afternoon the Kia Forte would be the first car made at the plant.

In recent years Mexico has begun attracting the attention of companies seeking to build more high-end vehicles, a nod to the country’s improving workforce, which 20 years ago might not have been considered reliable or experienced enough to put together a BMW X5 or an Infiniti Q.

In June, Daimler AG (FRA:DAI), the maker of Mercedes-Benz, and Nissan Motor Co. (TYO:7201) announced plans to spend about $1.36 billion building a plant near Nissan’s existing one in the Mexican state of Aguascalientes. The project would see production of the Nissan’s Infiniti luxury cars by 2017 and future Mercedes models as part of an expanding alliance between the German luxury carmaker and Japan’s third-largest car company.

A week after that announcement Daimer rival Bayerische Motoren Werke AG (ETR:BMW) said it was spending $1 billion to build another plant in Mexico, one that will produce about 150,000 vehicles a year beginning in 2019. The German carmaker will make four of its popular models for the North American market in the central industrial city of Toluca.

“BMW and Mercedes are going to be building cars down there. They traditionally might have focused on lower end cars, but BMW, Mercedes, Infiniti – these aren’t low-end cars,” said Barber.

Mexican automotive workers make in a day roughly what U.S. car factory worker make in an hour, and there are more than a half-million of those Mexican automotive workers. Since 2011 Mexico has attracted nearly $10 billion in foreign direct investment (including commitments that have not yet been fulfilled) from the automotive sector, according to the Center for Automotive Research in Ann Arbor, Michigan.

Here’s a list of automotive assembly facilities in Mexico, including ones that have already broken ground but aren’t ready yet for production.


Bayerische Motoren Werke de México S.A. de C.V. 

Toluca, State of Mexico

BMW 3 Series compact sedan

BMW 5 Series mid-sized sedan

BMW 7 Series full-sized sedan

BMW X5 mid-sized luxury SUV


Mercedes-Benz México S. de R.L. de C.V.

Santiago Tianguistenco, State of Mexico

Freightliner trucks

Monterrey, Nuevo León state

Urban and touring buses

Saltillo, Coahuila state

Freightliner trucks


Saltillo Truck Assembly

Saltillo, Coahuila state

Ram pickup truck

Toluca Car Assembly

Dodge Journey mid-sized crossover

Fiat 500 city car


Cuautitlán Stamping and Assembly Plant

Cuautitlán Izcalli, state of Mexico

Ford Fiesta supermini

Hermosillo Stamping and Assembly

Hermosillo, Sonora state

Ford Fusion mid-sized sedan

Lincoln MKZ mid-sized luxury car


San Luis Potosí Assembly

San Luis Potosí, San Luis Potosí state

Chevrolet Aveo subcompact cars

Silao Assembly

Silao, Guanajuato state

Chevrolet Silverado

GMC Sierra

Ramos Arizpe, Coahuila state

Opel Corsa

Chevrolet HHR station wagon

Cadillac SRX crossover (production will move to Tennessee)


Honda De México S.A. de C.V.

El Salto, Jalisco state

Honda CR-V compact crossover

Celaya, Guanajuato state

Honda Fit five-door subcompact

Honda HR-V subcompact crossover


Nissan Mexicana, S.A. de C.V. Aguascalientes

Aguascalientes, Agusacalientes state

Nissan March supermini

Nissan Versa subcompact sedan

Nissan Sentra compact car

Nissan Frontier pickup truck

Nissan Mexicana, S.A. de C.V. Cuernavaca

Cuernavaca, Morelos state

Nissan Sentra

Nissan Versa

Nissan Frontier pickup truck

Nissan NV1200 light commercial vehicle

Nissan NV200 taxi for New York City


Toyota Motor Manufacturing de Baja California S. de RL de C.V

Tijuana, Baja California Norte state

Tacoma pickup truck


Volkswagen de México, S.A. de C.V.

Puebla, Puebla state

Jetta sedan

Golf compact five door

The list above excludes plants that make car components, like engines and chassis used by other assembly plants to build passenger vehicles.