UPDATE 1-Kia Motors to invest SKK 8.1 bln in Slovak plant

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South Korea's Kia Motors will invest 8.1 billion crowns ($308.8 million) into a new production unit to raise engine output capacity at its Slovak car factory, the Slovak Economy Ministry said on Wednesday.

The car maker said last week the new facility would raise potential engine production at the Zilina plant to 600,000 units a year from the currently planned 300,000.

"It's an additional investment for the engine factory. It will create an additional 400 jobs," said ministry spokesman Branislav Zvara. A Kia Motors spokesman in Slovakia declined to confirm the ministry's statement.

The extra output should boost Slovakia's exports as the new plant will supply a Hyundai car assembly plant to be built in the neighbouring Czech Republic.

Kia has said construction should start in the first or the second quarter of 2007 and the facility should come onstream by end-2008.

The second largest auto maker in South Korea, Kia launched production at its 1 billion euro plant in northwestern Slovakia last week. Output, consisting of the Cee'd and Sportage models, will rise to more than 150,000 cars in 2007, and the plant will eventually reach its 300,000 unit capacity.

News of large foreign investment deals is closely watched by financial markets as the inflow of foreign capital and prospects of new export-oriented businesses have boosted Slovakia's currency, the crown, in the past few years.

The automotive industry in Slovakia currently consists of assembly plants owned by Germany's Volkswagen and French maker PSA Peugeot Citroen , and a number of car-parts producers.

The three factories together should make Slovakia the world's biggest car maker per capita, with expected annual output of over 800,000 units in 2008 or 2009.

[BRATISLAVA/Reuters/Finance.cz]