South Korean automaker Kia Motors Corp has earmarked $1 billion to build a vehicle assembly plant in Mexico, and President Enrique Pena Nieto said on Wednesday he expects the plant will spur investments by suppliers of another $1.5 billion. The plant, with a capacity to build 300,000 vehicles a year, will be located in the state of Nuevo Leon and should open in the first half of 2016, Kia said. "This investment will trigger others, those of their suppliers. We estimate that suppliers will invest another $1.5 billion," Pena Nieto told an event in Mexico City. Economy Minister Ildefonso Guajardo said the facility would boost Mexico's auto output by 13 percent. The Kia plant marks the latest in a series of major investments by global automakers as they seek to take advantage of Mexico's growing industrial base, low labor costs and tariff-free access to the U.S. market. Last month, German luxury car maker BMW announced a $1 billion Mexican plant investment. So far this year, Mexico has attracted around $10 billion in auto sector investments. Rolando Zubiran, secretary of economic development for Nuevo Leon, said he was confident the Kia plant's capacity could later be expanded beyond 300,000 units, depending on demand. One person with knowledge of the negotiations prior to the announcement said the plant could pave the way for South Korea and Mexico to resume stalled bilateral free trade talks. Kia, an affiliate of Hyundai Motor Co, plans initially to produce the Forte compact and Rio subcompact at the plant, people in South Korea close to the talks said. Kia is also considering adding the Sportage sport utility vehicle. The plant will help Kia meet rising demand in both North and South America and reduce its reliance on exports from its home market, where high labor costs and a strong currency have eroded cost-competitiveness. Vehicles built in South Korea made up 57 percent of Kia's global sales last year, compared with 38 percent for Hyundai. Kia's U.S. assembly plant in Georgia, which produces the Optima sedan and Sorento SUV as well as Hyundai's Santa Fe SUV, is running at full capacity. Kia's U.S. vehicle sales rose 7 percent this year through July to 349,722, benefiting from demand for crossovers like the Soul and Sportage, and outperforming Hyundai's 1 percent gain and the wider market's 5 percent rise. (Reuters)