Hyundai Mobis, South Korea’s largest auto parts maker, said on Sunday that it would invest 95 million euros ($127 million) to build a car lamp factory in the Czech Republic.

The factory near Ostrava will have an annual capacity to produce head and rear lamps for 750,000 vehicles of its parent Hyundai Motor and Kia Motors operating in the region.

“The European factory is expected to reduce foreign exchange risks and save distribution time and costs,” an official at Hyundai Mobis said.

This is Hyundai Mobis’ second plant in the Czech Republic after the one in Nosovice, which produces driver seat modules and front-end modules for 300,000 vehicles a year.

Hyundai Mobis is expanding its number of overseas plants to increase its supply of auto parts to Hyundai Motor, Kia Motors and European carmakers.

It has set up 12 module plants and eight parts factories in eight countries, including Slovakia, Russia and Turkey.

Hyundai Mobis said it would sign an agreement on Tuesday with the Czech government to build the plant by 2017.

The Czech government offered to provide incentives such as tax cuts for the establishment of its plant in the country.

By Park Han-na (hnpark@heraldcorp.com)