Nearly two decades after its parent Hyundai Motor Company launched its first car -- the Santro in India, Kia Motors Corp has signed a Memorandum of Understanding (MoU) with the Andhra Pradesh government to set up a manufacturing facility in Anantpur district, said a release issued by the state government.
Kia and its vendors will be spending $2 billion to set up a greenfield facility in Erramanchi, said the release. The integrated project will have stamping, welding, painting and assembly lines, added the release.
Construction for the 3,00,000 unit capacity will begin only after October this year and production is expected to begin in 2019.
“We are delighted to announce that Kia's newest manufacturing facility with be here in Andhra Pradesh. It will enable us to sell cars in the world's fifth-largest market, while providing greater flexibility to our global business,” said Han-Woo Park, President, Kia Motors after signing the MoU with the state government.
Kia Motors plans to make a retail foray in India with compact sedan, and a compact sports utility vehicle (SUV), both of which are expected to go on sale by the end of 2019, according to the release.
While the compact sedan segment witnessed a drop in sales in the last financial year, the compact SUV segment has picked up pace in the country. India has projected to become the third largest vehicle market in the world by 2020.
Kia is expected to compete with market leader Maruti Suzuki India Ltd, Honda Cars India Ltd., and its own group company Hyundai Motor India.
China is currently Kia's largest market in terms of sales, but stricter import laws have led to a sharp drop in sales in the last financial year.
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