Kia Motors to build manufacturing plant in India

  • India presents an opportunity for further sustained growth in the fifth largest new car market in the world
  • Construction of Andhra Pradesh facility to commence in Q4 2017
  • Mass production due to begin in 2019, with 300,000-unit annual capacity
  • US$1.1 billion investment agreement for establishment of manufacturing plant in India

Kia Motors has signed a memorandum of understanding (MOU) with the State Government of Andhra Pradesh, India to build a new manufacturing facility in Anantapur District. The MOU was signed today at a ceremony held in the city of Vijayawada, a part of Andhra Pradesh Capital Region, attended by executives from Kia Motors and the Chief Minister of Andhra Pradesh, Nara Chandrababu Naidu.

Construction of the new manufacturing facility, Kia Motors’ first in India and representing approximately a US$1.1 billion investment, will commence in the final quarter of 2017. The manufacturing facility is expected to begin production in the second half of 2019 and produce up to approximately 300,000 units each year.

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 (2.16 km2 / 536 acres) and incorporate facilities for stamping, welding, painting and assembly. The site will also be home to numerous supplier companies’ facilities.

“We are delighted to announce that Kia’s newest manufacturing facility will be here in Andhra Pradesh,” said Han-Woo Park, President of Kia Motors. “It will enable us to sell cars in the world’s fifth largest market, while providing greater flexibility for our global business. Worldwide demand for Kia cars is growing and this is our latest step towards becoming a leading global car manufacturer.”

Manufacturing in the fastest-growing major new car market

Construction of a new manufacturing facility in India will enable Kia to maintain its position as one of the world’s fastest-growing automobile brands. The new facility in Anantapur will enable the company to start selling its models in India, and benefit from further sustainable sales growth, locally and internationally.

Kia plans to commence local sales of cars produced at the new facility towards the end of 2019, once mass production begins in Anantapur. Furthermore, the region’s fast-developing supply chain network and skilled labor force were other key reasons for the new investment by Kia Motors.

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

About Kia Motors

Kia Motor Corporation, literally “Kia automobile”; stylized as KIΛ), headquartered in Seoul, is South Korea’s second-largest automobile manufacturer, following the Hyundai Motor Company, with sales of over 3.3 million vehicles in 2015. As of December 2015, the Kia Motor Corporation is 33.88% minority owned by the Hyundai Motor Company totaling just over $6 billion USD. Kia Motor Corporation is a minority owner of more than twenty Hyundai subsidiaries ranging from 4.9% up to 45.37% totaling more than $8.3 billion USD.

Press Release

Kia Motors to finalize it’s plant location in India by this August

Hyundai’s sister company Kia Motors to zero in on it’s plant location in India by August. Production to start in 2019 with initial capacity of 3 lac vehicles.

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According to Reuters, South Korea’s Kia Motors Corp is expected to pick a site next month for its first factory in India, stepping up plans to start making cars in one of the world’s fast-growing auto markets, two people familiar with the matter said.

The move would enable Kia to leverage the existing supplier base of its affiliate Hyundai Motor Co, India’s second-biggest automaker by sales. The proposed factory would start production in 2019 and eventually have capacity to make 300,000 Kia vehicles a year, one of the people told a major bet for a firm that sold 3.05 million vehicles last year.

The Korean pair, jointly the world’s No.5 carmaker, are chasing new business after missing annual targets in 2015 for the first time since the 2008 global financial crisis. Their combined sales fell 2 percent in first-half 2016, hit by weakness in markets like China, Russia and Brazil.

India is likely to become the world’s third-largest car market by 2020, according to IHS, up from fifth place now, with annual sales nearly doubling to about 5 million vehicles from 2.7 million in 2015.

The size of Kia’s investment has yet to be decided, one of the people said, declining to identify which models will be produced at the factory. Kia is best known as a maker of relatively inexpensive cars, like the Rio sub-compact.

Three sites are under consideration for the plant, and Kia may announce the plan in September after deciding on a location in August, the second person said.

The people spoke on condition of anonymity because the project was confidential.

The states of Andhra Pradesh, Maharashtra and Gujarat have all been wooing Kia, according to two other people with knowledge of the matter. One of the two, an official with the Andhra Pradesh administration, said the state – which neighbors Tamil Nadu, home of Hyundai’s existing plants near Chennai – is the frontrunner.

Kia said in a statement to Reuters on Thursday that it was “continually evaluating potential locations for overseas manufacturing facilities, including India, to secure additional engines for future growth. However, as of now no concrete plans have been finalised.”

MARUTI CHALLENGE?

Hyundai started India production nearly two decades ago and has two factories in India that make cars for the domestic market and for export to Europe and elsewhere.

The firm trails only Maruti Suzuki India Ltd in sales in India, and has an extensive service and dealer network that gives it an advantage over global rivals that have struggled to build market share including General Motors, Toyota Motor Corp and Volkswagen.

Kia’s South Korea factories accounted for 57 percent of its sales last year. It also has plants in China, the United States and Slovakia, and its first Mexico factory began production earlier this year.

For the time being most cars sold in India are small. Hyundai sells several low-priced vehicles in the country, which could present a challenge in terms of market positioning for Kia, which would not want to cannibalise Hyundai sales.

Hyundai shares parts and vehicle underpinnings with Kia, which Hyundai bought at the height of the Asian financial crisis in 1998. Differentiating their brands has been a challenge, as they compete in similar segments and markets.

via: Reuters