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

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

Kia said that its factory in the state of Andhra Pradesh in India's southeast will be completed by late 2019 and produce up to 300,000 vehicles per year.

Kia Motors claims that the construction of its first manufacturing facility leads to an approximate investment of US$1.1 billion investment, and will commence in the final quarter of 2017. Shares of Kia Motors closed Thursday at 35,000 won, down 2.51 percent from the previous session.

Reuters reported in February that Kia was close to finalising Andhra Pradesh as the site for its first Indian factory, with production scheduled to start in 2019. The company has signed a memorandum of understanding (MoU) with the government of Andhra Pradesh to build its facility in Anantapur district. The company sold a total of 641,686 units worldwide in the first quarter, down 6.2 percent from the same period previous year with sales in China and the USA where the company's outdated volume models are sold dropping 35.6 percent and 12.7 percent, respectively. Kia is aiming an annual production capacity of 3 lakh units from its Anantapur plant.

In a major boost to automotive manufacturing in India, Korean company Kia Motors has chose to set up base in Andhra Pradesh with an investment of $1.1 billion. Hyundai and Kia previously announced plans to recall almost 1.5 million vehicles over defective engines in North America and South Korea. 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 Indian auto market is growing at a rapid pace and over 3.3 million new cars were sold in 2016.

India's automobile market has high growth potential because of the country's population of over a billion and the low distribution rate of 32 cars per 1,000 people, the automaker said.

It will enable Kia to sell cars in the world's fifth- largest market while providing greater flexibility for the company's global business, he added.

Kia India's product plans are unclear as of now.

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