Kia Motors, Korea's second-ranked carmaker, is expected to start operations at its plant in Mexico as planned amid reports that negotiations over the local government's promised incentives seem to be making some headway, industry watchers said Thursday.

Media reports have raised speculation that the May launch of the plant located in the northern Mexican state of Nuevo Leon might face a hurdle as the local government sought renegotiations on incentives and other benefits it earlier promised to lure the production facilities.

Kia Motors officials said that the changed stance might be attributed to such reasons as its financial shortage problem, confirming that talks were underway.

Recent local media reports quoted the Nuevo Leon state governor as saying that a marked headway has been made from the talks and that an agreement could be reached in a matter of a few days.

He was also quoted as saying that both sides have agreed that they have to do their best for the sake of their respective interests, adding that he is open to anything.

Kia Motors was promised, among other things, land for a plant free-of-charge and a five-year corporate tax exemption by the state of Nuevo Leon for its assembly plant.

The plant, which is scheduled to start operation on May 16, will have an annual capacity of 300,000 units. It is regarded as a main foothold for Kia Motors seeking to expand its presence in the area.

"There will be no delays in our push to start commercial production at the plant next month. We just hope that this matter will be resolved in an amicable manner," a Kia Motors official said. (Yonhap)