Kia in final stage of talks to build plant in India

Posted April 19, 2017

"A unit of South Korea's biggest carmaker has chosen Penukonda in Anantapur district in southern Andhra Pradesh, which is starting the process of buying land for the factory", reported a leading business daily. The factory would be the first automobile manufacturing facility in Andhra Pradesh and be roughly 350 km away from Chennai's automobile hub, where most automakers including Hyundai, Renault Nissan, Mercedes Benz, BMW, Ford and Ashok Leyland produce their vehicles.

The Industries and Commerce department of Andhra Pradesh has on April 13 issued government orders for acquisition of almost 600 acres of land by paying Rs 10.5 lakh an acre "as a special case". Operations at the plant is expected to begin in 2018, while the first auto is expected to be rolled out in 2019. An official from Kia admitted that the company has been studying the option and negotiating with Indian state governments, but denied of reaching a decision on the location or investment scale.

Kia will reportedly sign an investment agreement with the Indian state of Andhra Pradesh late this month. Kia has been visiting India in search of a factory location since a year ago and could sign a deal as early as this month, local sources said.

Kia is set to build its first auto factory in India at a cost of W1 trillion, industry sources said on Monday (US$1=W1,138).

Its affiliate Hyundai now operates two factories in the Indian city of Chennai with a combined annual capacity of 650,000 cars.

The small vehicle is likely to be the new Kia Picanto, which is based on the Grand i10, while the sedan could be the Rio sedan that made its debut at the 2017 NY Auto Show, an ideal rival of the Maruti Ciaz and Honda City. Another Hyundai vendor that may also supply to Kia revealed that the company has started discussing a project in South Korea codenamed SP2, which is likely to be a compact SUV based on the Hyundai Creta. Kia's debut in India will also ensure that Hyundai's manufacturing capacity will be optimally utilized here.