South Korea's Kia Motors to invest $1.1 bn to set up facility in India

Facility is expected to begin production in 2019, with an annual capacity of 300,000 units

Last Updated : Apr 27 2017 | 1:25 PM IST

South Korea’s Kia Motors will invest $1.1 billion (about Rs 7050 crore) to set up its first automotive manufacturing plant in India at Anantapur (Andhra Pradesh). The manufacturing facility, the construction for which will commence in the final quarter of 2017, is expected to begin production in the second half of 2019 and produce up to approximately 300,000 units each year.

Kia Motors has signed a memorandum of understanding (MOU) with Andhra Pradesh Government to build the manufacturing facility in Anantapur district.

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 sq ft 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. 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,” said Han-Woo Park, president of Kia Motors, in a press release.

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 labour 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.

Headquartered in Seoul, Kia Motor Corporation is South Korea's second-largest automobile manufacturer, following the Hyundai Motor Company, with sales of over 3.3 million vehicles in 2015.