By Kwaak Je-yup
A third factory in China is in the works for Kia Motors with an annual production capacity of 300,000 vehicles, raising its combined output with sister automaker Hyundai Motor to 1.73 million, the automaker announced Wednesday.
Chung Mong-koo, chairman of Hyundai Motor Group that operates Kia and Hyundai, visited Nanjing, Jiangsu Province, to sign a memorandum of understanding Wednesday evening.
Kia’s two factories are already located in the vicinity, about 5 km away from the new site. Hyundai Motor also has three more in operation; European makers such as Volkswagen also manufacture in the area.
According to Kia, its existing facilities in the city of Yancheng have reached maximum capacity of 430,000 cars per annum.
In mainland China, Hyundai also produces 1 million cars per year.
“Kia is one of the fastest growing businesses in mainland China, and this is due to the active and consistent support of Jiangsu Province and Yancheng (where the factories are located)” said Chung in a written statement released by Kia. “With the new factory to be built from next year, we intend to provide safe and high-quality vehicles to Chinese consumers and contribute to the regional economy and quality of life.”
According to Kia, 1.5 square kilometers of land for the new factory will be provided for free by the Yancheng municipal government, with additional benefits including lower taxes.
Around 120 Korean contractors to the motor company are to benefit from the planned expansion as well.
The company is going to break ground at the end of next year and plans to finish construction in two years.
The new facility will be dedicated to models expressly made for China, reflecting the tastes and needs of Chinese consumers.
In 2007, Kia sold 101,427 cars in the Chinese market and in 2008, after the opening of its second factory, the number jumped 40 percent to 142,008.
Since then the curve has steepened even further, with sales reaching 241,386 in 2009, up 70 percent from the previous year. Last year, it sold 333,028 self-branded cars.
The market share for Kia has also jumped from 2007’s 2.0 percent to 3.0 percent last year, jumping from 18th to 13th place during the same period.
According to Kia, the market share in the first nine months of this year was 3.5 percent, which took the second brand of Hyundai Motors into the Top 10.