Kia Motors says to invest $1.1 billion to build Andhra Pradesh factory

Allan Goodman
April 28, 2017

Kia Motors Co. plans to invest $1.1 billion in India to build its first plant in the world's fifth-largest auto market.

Kia Motors, an affiliate of Hyundai Motor, said it plans to start production at the factory in Anantapur District in the state of Andhra Pradesh in the second half of 2019.

We informed you earlier that Kia Motors, a subsidiary of the South Korean automaker Hyundai, is going to establish its manufacturing plant in India.

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.

The new plant will produce 300,000 units annually, including compact cars designed for the Indian market alongside sport utility vehicles.

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"This is a significant step in my effort to turn Andhra Pradesh into an automobile manufacturing hub", the chief minister said.

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Kia has over 51,000 employees worldwide and annual revenues of over $45 billion. The Kia factory site will also have several suppliers setting up shop in the vicinity of the plant, though several of Hyundai's suppliers may also supply to the plant.

India is the fastest growing major new vehicle market and the fifth largest in the world, with more than 3.3 million new cars sold in 2016.

Kia is expected to leverage Hyundai's supply chain network built around its factories in the neighbouring state of Tamil Nadu to gain a foothold in the Indian market, tipped to become the world's third-largest by 2020.

The intitial hit products from the brand in India will be a compact SUV and a compact sedan.

Kia's sales in March 2017In March 2017, Kia sold a total of 238,222 vehicles comprising passenger cars, recreational vehicles and commercial vehicles.

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

Sales in the domestic market fell 5.1 percent amid the shortage of new models.

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