Kia Motors, AP govt to sign MoU for $2-bn facility

Posted April 28, 2017

During a conference call on April 27, Kia said its first-quarter operating profit slumped 39.6 percent to 382.8 billion won on-year, hit by lower sales in its major markets China and the US. The new facility is being set up with an investment of $2 billion and marks the company's entry into India.

Kia is the latest automobile manufacturer to bet big on India-Hyundai Motor Co., Ford Motor Co., General Motors Co., Toyota Motor Corp. and Honda Motor Co. all are battling for a bigger share in the fast-growing market.

The plant, Kia's first in India, will come up in Penugonda in Anantapur district and produce three lakh cars a year.

The company plans to produce a compact sedan and compact SUV especially for the Indian market at the new plant.

This brings us to the sixty-four dollar question, what cars would Kia bring to India?

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Construction of the new factory will commence in the final quarter of this calendar year and is expected to begin production in the second half of 2019, the Seoul-headquartered company said.

The allure of India's growing auto market is becoming too strong to resist.

"It (the plant) will enable us to sell cars in the world's fifth largest market, while providing greater flexibility for our global business". "And they expect Hyundai's introduction of new models and recovery in emerging markets will help boost its profit".

The world's fifth-biggest automaker together with affiliate Kia Motors reported on Wednesday a first-quarter net profit of 1.33 trillion won (S$1.64 billion). Going by this statistic, India is poised to become the third largest auto market in the world by the end of 2020. It is struggling to win consumers over with a sedan-heavy line-up in a world where sport utility vehicles (SUVs) are the hot sellers.

Hyundai is a brand which has been known for its design philosophy and Kia Motors falls under the same bracket. Hyundai greatly cut production at China factories in March to decrease stocks, sources previously informed Reuters.