Kia Motors will break ground soon on a plant in Mexico, according to Reuters, citing two sources familiar with the matter.

The plant will be built in Monterrey and will have a capacity of 300,000 vehicles. Initially the new plant will be used to manufacture two small cars.

The facility would help meet demand in the U.S., according to the two sources, who declined to be identified because the plans are not public yet.

When asked about the new factory, a Kia spokesman said to Reuters that the automaker is considering a number of options to resolve constraints in the U.S., but no decision has been made.

At least five people familiar with the group's plans said earlier this year that Hyundai and Kia were looking to invest in new manufacturing capacity, and were running "feasibility studies" in promising markets, including Mexico.

Back in March, Hyundai said it was aiming to build a new plant in Chongqing, a southwestern location in China.

"Hyundai and Kia are now more flexible with building new plants as their global manufacturing capacity has reached limits," said Suh Sung-moon, an auto analyst at Korea Investment & Securities, according to Reuters. "Without new factories, the duo is expected to lose market share in 2016 for the first time in over a decade."

The Monterrey plant would be Kia's first in Mexico, and production is expected to begin around 21 months after groundbreaking, according to one of the sources.

Kia has a factory in Georgia, which manufactures the Optima mid-sized sedan, and he Sorento sport utility vehicle (SUV), as well as Hyundai's Santa Fe SUV.

Hyundai has one U.S. facility, located in Alabama.

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