Kia to Enter India, Plans to Pump $1.1 Billion Into a Local Unit

The South Korean firm will set up its plant in the district of Anantapur in Andhra Pradesh.

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Car and Bike
2 min read
Kia plans to begin operations in India by the end of 2019 (Photo Courtesy: Wikimedia Commons)

Kia Motors is lining up around $1.1 billion (over Rs 7,000 crore) to set up a manufacturing plant in India where it plans to roll out a compact SUV and a compact sedan by 2019-end.

The South Korean firm, part of the Hyundai group, will sign a memorandum of understanding (MoU) with the Andhra Pradesh government to build a new plant in Anantapur district.

Construction of the new facility, Kia’s first in India and representing around $1.1 billion investment, will commence in the final quarter of 2017, the company said in a statement. The facility will have a capacity to produce up to 3 lakh units each year and is expected to start production in the second half of 2019.

Kia Plans to Enter the Compact Vehicle Market

Local sales of cars produced at the new facility will start towards the end of 2019, the company said.

Kia plans to produce a 'strategic' compact sedan and compact SUV, especially for the Indian market, at the new plant, which will occupy around 23 million square feet and incorporate facilities for stamping, welding, painting and assembly.

The site will also be home to numerous supplier companies' facilities, Kia said.

We are delighted to announce that Kia’s newest manufacturing facility will be here in Andhra Pradesh
Kia Motors President Han-Woo Park said.

It will enable Kia to sell cars in the world's fifth-largest market while providing greater flexibility for the company's global business, he added.

Park said:

Worldwide demand for Kia cars is growing and this is our latest step towards becoming a leading global car manufacturer.

The fast-developing supply chain network in the region and skilled labour force were other key reasons for the new investment by Kia Motors, the statement said.

India is the fastest growing major new car market and the fifth-largest in the world, with more than 3.3 million new cars sold in 2016.

Forecasts suggest that the country will become the third-largest car market by the end of 2020.

Kia's global production capacity currently stands at over 3 million units while Hyundai's is around 5 million vehicles annually.

Globally, Hyundai shares parts and vehicle underpinnings with Kia, which it acquired in 1998.

Kia’s range of vehicles includes compact crossover Sportage, urban crossover Soul, compact car Rio and mid-sized and luxury sedans under the brand names Optima, Cadenza and K900.

It remains to be seen how the company positions its vehicles in India where sister firm Hyundai already sells several vehicles in the mass segment.

Kia also has hybrid and electric vehicles on offer in some countries.

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