Korean car maker Kia Motors to pump in Rs 7,000 cr for India ride

To set up a manufacturing unit in Andhra Pradesh with an annual capacity of 300,000 units

Korean small car maker Kia Motors is ready for a ride in the fast-growing Indian car market with an investment of $1.1 billion (about Rs 7,000 crore). It will set up a manufacturing unit in Andhra Pradesh with an annual capacity of 300,000 units. Kia’s parent company Hyundai is the country’s second-biggest car maker with a 17 per cent market share.

Construction of the new manufacturing facility, Kia Motors’ first in India and representing an investment of $1.1 billion will commence in the final quarter of 2017 calendar year. The manufacturing facility is expected to begin production in the second half of 2019, the Seoul-headquartered company said in a statement.

Kia plans to produce a strategic compact sedan and compact SUV especially for the Indian market at the new plant, spread over an area of 563 acres. 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 at Kia Motors. The company today signed a MoU with the state government of Andhra Pradesh for the new unit at Anantapur. 

Kia did not opt to set up manufacturing in Tamil Nadu (TN) where Hyundai’s manufacturing plants are located. TN is also home to other leading brands like Ford, Renault-Nissan and BMW. 

“The region’s fast-developing supply chain network and skilled labour force were other key reasons for the new investment by Kia Motors,” the company said explaining its decision to opt for Andhra.

Park said the investment will enable Kia to sell cars in the world’s fifth largest market while providing greater flexibility for the company’s global business. 

“Worldwide demand for Kia cars is growing and this is our latest step towards becoming a leading global car manufacturer,” he added. Kia sells more than three million vehicles a year at its 14 manufacturing and assembly operations in five countries and has annual revenue of $45 billion.

India, the fifth largest car market in the world, saw domestic sales grow more than nine per cent to three million vehicles in the year ended March 31, 2017. 

Another 758,000 vehicles were exported last year when shipments grew more than 16 per cent. The country is expected to emerge as the third biggest market by 2020 with an annual volume of five million units