Winning Move

Kia Motors has decided to build its first plant in India with a capacity of annual 300,000 car production by investing one trillion won (US$900 billion).
Kia Motors has decided to build its first plant in India with a capacity of annual 300,000 car production by investing one trillion won (US$900 billion).

 

Korea’s second-largest automaker Kia Motors will invest one trillion won (US$900 billion) to build its first plant in India with a capacity of annual 300,000 car production. The plant also would be the 5th overseas production base for Kia.

According to the Indian media and local industry sources on April 19, Kia has decided the investment in India and will make the investment agreement with the state of Andhra Pradesh at the end of this month. The Indian state already issued an administrative order to secure the factory land of 2.31 million square meters for the construction, which will be built at Penukonda, a town 70 kilometers from Andhra Pradesh provincial city of Anantapur. The factory is also roughly 350 kilometers away from the Chennai automobile hub where its parent company Hyundai Motor produces 650,000 units annually.   

Groundbreaking for the plant is expected to take place in May this year at the earliest with the construction scheduled to be completed by the end of 2019. The factory will produce sports utility vehicles (SUV) and small sedan models sold exclusively for the Indian market.

Kia Motors is also considering to build the second plant at the same site in the future with an additional investment worth 700 million won (US$630,000) depending on the Indian market demand.

The move of Kia Motors is interpreted as a measure to seek new way-outs amid its suffering from slow sales in China owing to the communist country’s retaliations to South Korea against the latter’s decision of deployment of U.S. anti-missile defense systems in the nation.

India's heavy duties of up to 60 percent on imported cars also contributed to the Korean car maker’s decision. Actually, Kia Motors has been looking for a new production site over the last two years, and selected the site at Anatapur where the company can expect a synergy with the Chennai-Hyundai Motor plant and around 100 local vendors. 

With the coming Kia Motors production plant, Hyundai Motor Group is expected to have up to nearly a 1 million car production capacity in India by 2019. 

 

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