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Roundup: Kia Motors to invest 1 bln USD in India for new plant

Xinhua, April 28, 2017 Adjust font size:

Kia Motors, South Korea's second-biggest automaker, is set to enter the Indian car market by investing 1.1 billion U.S. dollars to build its first factory here, local officials said Friday.

The factory would be set up at Anantapur district in southern Indian state of Andhra Pradesh later this year. According to officials, the manufacturing plant will be having an annual capacity of making 300,000 vehicles, according to a statement issued by Kia Motors.

The memorandum of understanding (MoU) for the project was signed between local government of Andhra Pradesh and Kia Motors at Vijayawada city of Andhra Pradesh on Thursday.

Executives from Kia Motors and state's top officials were present on the occasion.

"Construction of the new manufacturing facility, Kia Motors' first in India and representing approximately a 1.1 billion U.S. dollars investment, will commence in the final quarter of 2017," said the statement.

The manufacturing facility is expected to begin production in the second half of 2019.

Kia Motors, the maker of Optima sedan, is considering making small cars and SUVs for the Indian market at the new plant.

Reports said South Korean manufacturers are shifting factories overseas to cut costs and avoid labor strife that has affected their production.

India is the world's fifth largest auto market and Kia hopes to cash in on the growth momentum of the car market in the country.

"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 statement said. "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's affiliate Hyundai motor, which has been in India for the past 20 years, is the second largest carmaker in India after Maruti Suzuki. It produces cars at a factory near Chennai in Tamil Nadu and has an annual production capacity of about 700,000 cars.

"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."

Analysts say with Kia making inroads in India, it remains to be seen how it would package its cars keeping in view the stiff competition from own affiliate as well as the market leader Maruti Suzuki.

"It would be interesting to see how Kia would fit itself in the Indian market," said Atul Ahuja, a Delhi- based automobile industry expert said. "To my understanding the stiff competition between the companies and variety available in the car market will be in the interest of customers."

India is considered as fastest growing major new car market with more than 3.3 million new cars sold in 2016. Endit