Kia To Enter India, Plans To Pump $1.1 Bn In Local Unit

Construction of the facility will commence from the last quarter of 2017, and Kia expects to begin production by the second half of 2019. Kia will invest $1.1 billion in its manufacturing plant in India. That cost KIA about 160 billion won.

Korean small vehicle maker Kia Motors has finally announced it would be entering the Indian auto market, with an investment of $1.1 billion (about Rs 7,000 crore).

The new manufacturing facility will be built in Anantapur district, Andhra Pradesh. The company plans to introduce a revamped Sonata sedan later this year, he said.

Kia's global production capacity now stands at over 3 million units while Hyundai's is around 5 million vehicles annually.

"Frosty ties between Korea and China, a sluggish global economy, the stronger won and deteriorating models offered are some difficulties Kia Motors is faced with", Kia Motors said. Spread over 563 acres, it will also be home to numerous supplier companies' facilities.

South Korea's No.2 carmaker Kia Motors posted a double-digit fall in operating profit in the January-March quarter on weak demand from China, a regulatory filing showed Thursday.

Kia, which operates in over 160 countries and territories worldwide, said it plans to develop a new compact sedan and SUV specifically for the Indian market.

India is the world's fifth biggest auto market and is growing rapidly. Kia is a subsidiary of the Hyundai-Kia Group, and is one of the world's largest mass-market automakers.

Kia is expected to leverage Hyundai's supply chain network, built over almost two decades, to gain a foothold in a market that is tipped to become the world's third largest by 2020. Bhargava says the Indian market has the potential to grow to up to ten mn units annually in the coming years and no other country can offer such an opportunity.

"It depends if Kia would look to differentiate its product (sedan) from the taxi segment".

More than three million passenger vehicles were sold in India in the financial year ended March 31, almost 10% more than the previous year, according to the Society of Indian Automobile Manufacturers.