Kia to invest $1.1 billion to build its first India factory

KIA is a South Korean car maker
KIA is a South Korean car maker
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28 April, 2017

The plant will be located in Anantapur, Andhra Pradesh and will be spread over an are of 536 acres.

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

The MoU was signed today at a ceremony held in the city of Vijayawada, a part of Andhra Pradesh Capital Region, attended by executives from Kia Motors and the chief minister of Andhra Pradesh, Nara Chandrababu Naidu. General Motors past year said it has put its $1 billion investment plan in India on hold as it reshuffles its product plan to better meet changing consumer tastes and jump-start its sluggish performance in the fast growing market.

Kia would adjust its China production to reduce inventories, cut costs and launch new models including a small crossover to minimise the impact of the political row, he said. Kia Motors will subsequently also produce other models, which includes its global high-volume hatchbacks - the Picanto and Rio.

Kia has signed a Memorandum of Understanding (MoU) with the State Government of Andhra Pradesh for setting up a production facility in the Anantapur district.

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Forecasts suggest that the country will become the third- largest auto market by the end of 2020.

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

"China sales falls in March are not the result of internal aspects, however the outcome of growing anti-Korean sentiment since late February, and some rivals making the most of anti-Korean sentiment in marketing", stated Zayong Koo, Hyundai vice president, on a teleconference. Ford bet big with new facilities in India two years ago and still has just a 3% market share. Another 758,000 vehicles were exported past year, when shipments grew 16 per cent. The automaker also suffered a hit from declining residual values, as compact auto prices fell more than mid-size SUVs, hurting brands like Hyundai or Kia which are more reliant on vehicle models, according to Larry Dixon, an analyst with the National Automobile Dealers Association.

The company plans to produce a "strategic" compact sedan and a compact SUV, especially for the Indian market, at the new plant. Strong demand for its new Grandeur sedan and Genesis G80 at home also contributed to earnings.


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