Kia Motors announces $1 billion investment in India

Hyundai Motor Co.'s vehicles at a port in the industrial city of Ulsan

Andhra Pradesh Government has entered into an MOU with South Korea-based Kia Motors which is World's Fifth Largest Automobile Company to establish its first-ever plant in India. Kia is aiming an annual production capacity of 3 lakh units from its Anantapur plant. According to reports online, the vehicle maker has signed an MOU with the Andhra Pradesh government which allows it to build a factory in the state. "The region's fast-developing supply chain network and skilled labor force were other key reasons for the new investment by Kia Motors", the company said on its decision to opt for Andhra. "It is the result of the anti-Korean sentiment that flared up within China since late February and some rivals that launched marketing to exploit the anti-Korean sentiment", said Koo Zayong, a vice president at Hyundai Motor.

Kia plans to produce a strategic compact sedan and compact SUV especially for the Indian market at the new plant, which will occupy around 23 million square feet and incorporate facilities for stamping, welding, painting and assembly.

China's retaliatory move against Korea following the latter's decision to deploy the US antimissile Terminal High Altitude Area Defense (THAAD) system in the country also weighed on sales of the Korean automaker in the world's largest auto market.


During the first three months of this year, the auto manufacturer sold a total of 658,332 vehicles, a 6.5 percent fall compared to the same period a year earlier when the company sold 704,458 units. Kia is also stressing on differentiating itself from its owner company - Hyundai, in the Indian market. Another 758,000 vehicles were exported past year, when shipments grew 16 per cent.

"I would say the traditional segmentation of the industry is blurring since there are products of different shape and size available in the market in the similar price range", Mathur said.

Hyundai's performance in the US, its second-biggest market, also dropped 3 percent, outweighing growth in Western Europe and India.

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