Hyundai subsidiary Kia Motors plans $1.1-bn India facility, signs MoU with Andhra govt

Korean auto-maker Kia Motors on Wednesday announced plans to invest $1.1 billion in Andhra Pradesh, to set up its first manufacturing facility in India.

Kia Motors also confirmed the signing of a memorandum of understanding (MoU) with the government of Andhra Pradesh to build a new manufacturing facility in Anantapur district.

The company signed the MOU on Wednesday at a ceremony held in the city of Vijayawada, a part of Andhra Pradesh Capital Region, attended by executives from Kia Motors and the Chief Minister of Andhra Pradesh, Nara Chandrababu Naidu.

Kia Motors plans to begin construction of the plant in the final quarter of 2017 and production at the new facility is expected to begin in the second half of 2019.

The plant, with an initial production capacity of 300,000 units per year, will also incorporate facilities for stamping, welding, painting and assembly. The site will also accommodate a number of parts and component suppliers.

The new facility will be spread over 23 million square feet (2.16 km2 / 536 acres).

The first products at the plant will be a strategic compact sedan and compact SUV, specially suited to the Indian market.

''We are delighted to announce that Kia's newest manufacturing facility will be here in Andhra Pradesh,'' said Han-Woo Park, President of Kia Motors. ''It will enable us to sell cars in the world's fifth largest market, while providing greater flexibility for our global business. Worldwide demand for Kia cars is growing and this is our latest step towards becoming a leading global car manufacturer.''

The new facility in Anantapur will enable the company to start selling its models in India, and sustain sales growth, locally and internationally and maintain its position as one of the world's fastest-growing automobile brands, Kia stated in a release.

India is the fastest growing major new car market and the fifth largest in the world, with more than 3.3 million new cars sold in 2016. India's car market is expected to become the third-largest car market by the end of 2020.

South Korean auto giant Hyundai Motor is Kia's single-largest shareholder with a 32.8 per cent stake.