KBI Dongkuk Industrial and HL Mando Expand Operations at Mexico Plants
Local Auto Parts Suppliers Bewildered by Trump-Driven Tariff Threats
Kia's parts supplier, which completed factory expansion in Mexico, is struggling to hide its bewilderment over the 'tariff war' triggered by the United States. The company invested 40 billion KRW in facility investment to expand profits, but if the tariff bomb becomes a reality, it could be wasted. Although the implementation of tariff imposition was postponed by one month due to an agreement between the US and Mexican governments, the situation is still not reassuring.
KBI Dongguk Industrial's Mexico factory, whose expansion was completed last year. Provided by KBI Dongguk Industrial
According to the automotive industry on the 4th, KBI Dongkuk Industrial completed the expansion of its Mexico factory at the end of June last year. The factory, originally established in 2017 in Pesqueria City, Nuevo Leon, Mexico, with an area of 50,000 m², was expanded by 14,720 m², with construction lasting about a year and an investment of 40 billion KRW.
The company decided to expand to produce products for Hyundai and Kia vehicles mass-produced in the North and South American regions. KBI Dongkuk Industrial's Mexico factory produces plastic injection products such as crash pads, headlamps, and rear lamps. These products are supplied to Hyundai Mobis's local factory and combined with products from various companies to be delivered as automotive parts to finished car manufacturers.
KBI Dongkuk Industrial expected the Mexico factory's sales this year to reach 65 billion KRW, an increase of more than 50% compared to the previous year. Furthermore, at the time of expansion, the company expressed its ambition to establish the facility as a production site with annual sales of 100 billion KRW.
However, due to the tariff imposition measures by US President Donald Trump, the possibility that sales will fall short of expectations has increased. KBI Dongkuk Industrial stated that the automotive parts manufacturing sector accounts for 99% of total sales and is closely monitoring the situation. A KBI Group official said, "The rise and fall of the operating Mexico factory depends on how long the finished car manufacturers can endure."
HL Mando, which has been operating its expanded Mexico factory since the second half of last year, is also feeling the burden of the US tariff policy. HL Mando has been promoting factory expansion since 2023 with an investment of 245 billion KRW to expand deliveries to local customers such as Kia and to increase new orders from global finished car manufacturers like GM and Ford, and some operations are currently underway. However, the company maintains that it cannot yet predict the situation. An HL Mando official said, "There will be some impact, but we have factories not only in Mexico but also in the US," adding, "The policy changes of the Trump administration are also variables."
Automotive parts companies believe that there will be no significant damage as long as the production volume of finished car manufacturers does not decrease. Kim Seung-jun, head of Kia's finance division, said, "In the short term, there will be additional burdens equivalent to the imposed tariffs, but in the long term, we are preparing through price increases and production site adjustments," adding, "We judge that there is no significant impact that would damage profitability." Kia exports about 120,000 units annually of the compact sedan K4 produced at the Mexico factory to the US. This year, the EV3 is also planned.
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