Kia to pick site for first India plant

Seoul/New Delhi, July 22

South Korea’s Kia Motors Corp is expected to pick a site next month for its first factory in India, stepping up plans to start making cars in one of the world’s fast-growing auto markets.

The move would enable Kia to leverage the existing supplier base of its affiliate Hyundai Motor Co, India’s second-biggest automaker by sales. The proposed factory would start production in 2019 and eventually have capacity to make 300,000 Kia vehicles a year.

The Korean pair, jointly the world’s No. 5 carmaker, is chasing new business after missing annual targets in 2015 for the first time since the 2008 global financial crisis. Their combined sales fell 2 per cent in first-half 2016, hit by weakness in markets like China, Russia and Brazil.

India is likely to become the world’s third-largest car market by 2020, according to IHS, up from fifth place now, with annual sales nearly doubling to about 5 million vehicles from 2.7 million in 2015.

Kia is best known as a maker of relatively inexpensive cars, like the Rio sub-compact.

Three sites are under consideration for the plant, and Kia may announce the plan in September after deciding on a location in August. The states of Andhra Pradesh, Maharashtra and Gujarat have all been wooing Kia.

Hyundai started India production nearly two decades ago and has two factories in India that make cars for the domestic market and for export to Europe and elsewhere. The firm trails only Maruti Suzuki India Ltd in sales in India. Kia’s South Korea factories accounted for 57 per cent of its sales last year. — Reuters