NEW DELHI -- Nissan Motor Co. plans to build its third vehicle factory in Mexico to address a capacity shortfall in North and South America as it gears up to overtake Honda Motor Co. in the U.S. and strengthen its leadership position in Mexico.

"We have too little capacities in the Americas," Andy Palmer, executive vice president of global planning and program management divisions at Nissan, said in an interview Thursday. "We are studying an additional factory in Mexico to address this shortfall but a decision on the location,...