By Jhoo Dong-chan
The nation's second-largest automaker, Kia Motors, is set to build its first production plant in India. The move seems to aim at offsetting its poor sales performance in China after the country carried out its trade retaliation against Korean products over the deployment of a U.S. anti-missile defense system here.
According to the India Times, Sunday, Kia Motors started buying land for the factory at Penukonda, a town 70 kilometers from Andhra Pradesh provincial city of Anantapur. It is also roughly 350 kilometers away from the Chennai automobile hub where a Hyundai Motor production plant is located.
"The car manufacturing facility, a first for Andhra Pradesh, will involve two phases with a cumulative investment of $1.6 billion (1.8 trillion won)," a Kia Motors official said. "The first phase of the production facility will have an installed capacity to produce 300,000 units a year."
Hyundai Motor Group, of which Kia Motors is a member, confirmed this.
"It's true. The deal has yet to be finalized with the Andhra Pradesh provincial government, but we expect that it will be concluded soon," a Hyundai Motor Group official said.
The Industries and Commerce department of Andhra Pradesh already issued a government order for acquisition of nearly 2.43 million square meters of land last week to accommodate the Kia Motors production plant.
Groundbreaking for the plant is expected to take place next month at the earliest. And the first car is likely to be rolled out by the end of 2019. Sports utility vehicles (SUV) as well as models sold exclusively in India are expected to be produced at the plant.
Due to India's heavy duties of up to 60 percent on imported vehicles, the Kia Motors brand has yet to enter the market in India.
The carmaker has been looking for a new production site for the last two years, and decided to build it at Anatapur where Kia Motors can expect synergy with the Hyundai Motor production plant in Chennai and its 100 local vendors.
Hyundai Motor built its first production plant in Chennai in 1998 to have an annual production capacity of 300,000 cars, and completed another plant with an annual capacity of 350,000 there in 2008.
Currently, Hyundai Motor is one of the most popular automotive brands in the world's second most populous country. Kia Motors will strive to duplicate the success of Hyundai there.
With the envisioned Kia Motors production plant, Hyundai Motor Group will have up to nearly a 1 million car production capacity in India by 2019.