Ford Motor Co. plans to spend $1.6 billion on a new car factory in Mexico, the latest in a series of auto industry investments flowing south of the border, and an investment that would help the Dearborn, Mich., company double its Mexican production starting in 2018.

It is the second big expansion announcement for Ford in Mexico in a year. The No. 2 U.S. auto maker last April outlined $2.5 billion in factory investments in Mexico, part of a wider plan to add 6,600 jobs in the country over the next few years. The new plant,...