Mexico City - South Korean automaker Kia Motors has officially inaugurated a new $3 billion plant in the northern Mexican state of Nuevo Leon, the Economy Secretariat said.

Kia, a unit of Hyundai, said in a statement last week that the newly inaugurated production facility, which began production in May 2016, would eventually have an annual production capacity of 400,000 units.

"Beginning in 2017, the plant will produce the all-new fourth generation B-segment Rio, which will have its world premiere on September 29th in Paris at the 2016 Mondial de l’Automobile," the statement added.

Kia will be in a position to respond in a more efficient manner to the emerging market in Mexico and also to demand in North America and elsewhere in Latin America, Hyundai Motor Group's chairman, Mong-Koo Chung, said at Wednesday's inauguration ceremony in the Pesqueria municipality.

He added that the opening of the plant would serve to further bolster relations between Mexico and South Korea.

With the production from the Pesqueria plant, Mexico will become the fifth-largest auto-making country globally by 2020 with an estimated 5 million motor vehicles produced annually, Mexican Economy Secretary Ildefonso Guajardo said.

Since President Enrique Peña Nieto took office in late 2012, five major vehicle assemblers have set up shop in Mexico, helping the country to attract foreign direct investment totaling $120 billion, Guajardo recalled.