Kia to Invest $1 Billion on Indian Car Plant

Kristi Paul
April 28, 2017

Hyundai Motor projected a progressive earnings recovery after publishing a smaller-than-expected 21 percent drop in quarterly profit as sales of higher-margin vehicles cushioned the impact of a USA recall and earnings decrease in China.

Kia Motors produces more than 3 million vehicles per year.

Hyundai announced Wednesday that its net profit for the first quarter came to about one.three billion USA dollars, a whopping 20-percent drop from the same period past year. Construction of the new facility, which will be located in Anantapur district, Andhra Pradesh, will commence in the final quarter of 2017.

Kia plans to produce a compact sedan and a compact SUV especially for the Indian market at the new plant, which will include facilities for stamping, welding, painting and assembly. Maruti Suzuki India Ltd., the Indian arm of Suzuki Motor Corp. dominates the market, which now contributes nearly half of Suzuki's global sales.

With parent Hyundai Motor operating at its peak capacity in India, Kia is likely to share manufacturing with Hyundai in the future to have better capacity utilisation and breakeven faster.

"It will enable us to sell cars in the world's fifth largest market", Kia Motors president Han-Woo Park said in a statement. Kia will build a brand new manufacturing facility for its India operations in Anantapur, Andhra Pradesh at a cost of a whopping Rs 7050 Crore ($ 1.1 Billion). Kia is also stressing on differentiating itself from its owner company - Hyundai, in the Indian market. The new factory will increase the portion of Kia's overseas production to almost 60 percent from 55 percent.

The Kia Sportage is a popular crossover model in the global market.

India continues to be one of the world's most promising markets as an increasing number of families can afford cars as incomes rise. "Furthermore, the region's fast-developing supply chain network and skilled labour force were other key reasons for the new investment by Kia Motors", it said.

Forecasts suggest that the country will become the third- largest auto market by the end of 2020. They also hold a $45 billion of turnover with 51000 employees.

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