Ford plans to build a new plant in Mexico and expand an existing facility that will double its production capacity in that nation over the next two years.
The Wall Street Journal, citing sources briefed about the plans, reported that the new plant will be constructed in San Luis Potosí and that an existing plant 250 miles away in Mexico City will be expanded.
Construction, which will likely cost in excess of $1 billion, is slated to begin this year. Upon completion in 2018, the projects are expected to increase Ford's Mexican output by 500,000 vehicles annually.
Favorable trade deals and much lower wage rates combined to fuel dramatic growth in the Mexican auto industry in recent years. Ford manufactured 433,000 vehicles in Mexico last year, which amounted to 14 percent of its production in North American.
The company is also investing $2.5 billion in engine and transmission plants in the country.
The new plants will reportedly produce the Ford Focus compact car, along with a forthcoming hybrid model and a third vehicle, according to the Journal.
Mexico was long considered the likely destination for the Focus and C-Max when Ford announced plans to relocate those cars — whose sales suffered amid low gas prices — from its Michigan Assembly plant.
The automaker plans to focus its U.S. production on more profitable trucks and SUVs.