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THE INVESTOR

Automobiles

Kia to build first India plant in Andhra Pradesh

  • PUBLISHED :April 18, 2017 - 12:12
  • UPDATED :April 18, 2017 - 15:49
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[THE INVESTOR]  Kia Motors confirmed on April 18 that it will set up its first Indian auto facility in the state of Andhra Pradesh. 

“Negotiations are still underway with the regional government so the details are not confirmed,” a Kia spokesperson told The Investor. “But we plan to sign the agreement soon.”

The remark comes after Indian business newspaper Economic Times reported that Kia has picked Penukonda in Anantapur district, Andhra Pradesh, as its location the previous day. The nation’s No. 2 automaker will sign a memorandum of understanding with the state authorities this month. Andhra Pradesh has offered about 600 acres of land for US$16,290 per acre. 




According to the report, Kia plans to invest a cumulative US$1.6 billion, with first phase of investment amounting to US$930 million. 

The new facility, which will likely be completed by 2019, is expected to roll out 300,000 units annually, focusing on small sedans and compact sport utility vehicles catering to the Indian market. Once completed, Hyundai Motor Group will roll out 950,000 units annually, when adding Hyundai’s 650,000 annual production at its two existing plants in the country. 

Hyundai entered India in 1998, operating two auto plants in Chennai, Tamil Nadu state -- some 80 kilometers from Kia’s planned auto plant in Andhra Pradesh. 

For years, the automaker has been seeking to make inroads in India to tap into one of the fast-growing auto markets in the world. Market watchers expect India’s passenger vehicle market to break into double digits this year, outpacing China’s growth soon. Kia’s Indian entry is also expected to boost the automaker’s slowed overseas sales in its major markets, the US and China. 

Kia currently operates four overseas plants, including the US, China, Slovakia and Mexico, that make up about 55 percent of total production last year. Once the Indian plant kicks off, the overseas production level will increase to 59 percent.

By Ahn Sung-mi (sahn@heraldcorp.com)
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