Where are the Korean cars that Colombia buys produced?

April 6, 2024

The increase in Korean car production in Latin America is the result of the offshoring of production to approach the Latin American market.

The offshoring of Korean car production has played an important role in integrating Latin America into global value chains, taking advantage of market opportunities and contributing to the region’s economic development.

The automotive industry in Latin America has experienced significant growth in recent decades, with countries such as Argentina, Brazil and Mexico leading vehicle production in the region, according to reports from the Korea Automobile Manufacturers Association (KAMA).

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An important trend in this panorama is the growing presence of Korean car manufacturers, especially Hyundai and Kia, whose production abroad has exceeded 3.68 million units in 2023.

This expansion has not only impacted the countries where these vehicles are manufactured, but has also generated significant changes in the economy and the automotive industry in the Latin American region.

Brazil, Mexico and Argentina concentrate automotive production in the region

Argentina, Brazil and Mexico account for most of the automotive production in Latin America, with a combination of local and foreign manufacturers operating production facilities in these countries.

Companies such as General Motors, Nissan, Stellantis, Toyota and Volkswagen have an established presence in the region, but leadership in domestic production is more evident in Argentina and Brazil due to policies protecting domestic industry.

There are three automakers in Ecuador: General Motors Ecuador (Chevrolet), Ciauto (Great Wall, Zotye), and Aymesa (Kia, Hyundai, Volkswagen, and Jac). A new vehicle assembly plant is planned for Ecuador as part of the trade agreement with South Korea, as announced by President Guillermo Lasso after meeting with Korean authorities in Brazil.

This new plant would be destined to assemble Korean cars, currently assembled at the Aymesa plant. President Lasso hinted at the need to move forward with this new facility, which would be part of the benefits of the trade agreement in its final stage.

On the other hand, in countries such as Chile and Colombia, domestic production is limited, and most of the vehicles sold are imported, with a strong presence of vehicles from Brazil and Mexico.

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Hyundai and Kia: leading Korean car brands in Latin America

Hyundai and Kia’s entry into the Latin American market has been remarkable, with significant expansion of their overseas production. Hyundai has established Korean car production bases in eight countries, including the United States, China, India and Brazil, while Kia has established facilities in countries such as the United States, China, Slovakia and Mexico.

This overseas production strategy has enabled them to increase their global presence and adapt to the specific demands of different regional markets.

In Brazil, for example, Hyundai’s plant in Piracicaba has been fundamental to the brand’s expansion in Latin America. This plant, inaugurated in 2012, has manufactured nearly two million vehicles in its first ten years of operation, including popular models such as the HB20 and the Creta SUV.

Hyundai’s presence in Brazil has strengthened its position in the Colombian market, where the brand has been recovering ground after a period of commercial difficulties. With a modern and efficient plant, Hyundai has managed to consolidate its position as one of the leading brands in Colombia, with plans to expand further in the future.

On the other hand, Kia has established a full production plant in Pesqueria, Mexico, it is the first and only plant of its kind in the state of Nuevo Leon. This plant, inaugurated in 2016 with an investment of more than US$3 billion, has been fundamental to Kia’s presence in the Mexican market and its position as one of the best-selling brands in the country.

South Korea is Mexico’s fourth largest trading partner in the world. According to Kotra Latin America, there are more than 100 Korean companies in the Mexican automotive industry, making it one of the main recipients of Korean investment.

Mexico plays an important role for the company as it manufactures for the U.S. and Mexican markets. In addition, Mexico is a platform for exporting to other Latin American countries with developed automotive sectors.