Korean automobile company Kia Motors on Thursday announced that it would produce a compact sedan and a compact SUV especially for the Indian domestic market with an investment of approximately $ 1.1 billion in Andhra Pradesh.
The company signed a memorandum of understanding (MoU) with Andhra Pradesh (AP) government in the presence of Chief Minister N Chandrababu Naidu for setting up the plant, which will occupy around 23 million square feet (536 acres) and incorporate facilities for stamping, welding, painting and assembly of auto parts.
The government has allotted around 600 acres of land for the company in Anantapur district on Bengaluru highway. The manufacturing facility is expected to start production in the second half of 2019 and produce around 3 lakh units each year, according to Kia Motors. The company will start the construction work in the last quarter of 2017.
"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, a part of Hyundai group. "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."
Kia believes construction of the new manufacturing facility in India will enable it to maintain its position as one of the world's fastest-growing automobile brands.
"The new facility in Anantapur will enable the company to start selling its models in India, and benefit from further sustainable sales growth, locally and internationally," said Park.
After spending more than a year in search of a suitable location across various states, the company's top officials met with AP chief minister on April 12 to inform their final decision, which was quickly reciprocated with allotment orders for 600 acres of land in Anantapur district bordering Karnataka by the state government.
AP is also a neighboring state of Tamil Nadu, which is home to the manufacturing base of Kia's sister concern and the country's second-largest car maker Hyundai Motor Company.
The region's fast-developing supply chain network and skilled labour force were the other key reasons for the new investment by the company, according to Kia Motors.
The state government has extended a host of incentives for the company, treating Kia Motors' investment as an ultra mega project.
Kia Motors plans to commence local sales of cars produced at this facility towards the end of 2019, once the mass production begins in Anantapur.
Korea's oldest manufacturer of automobiles, Kia produces over 3 million vehicles a year at 14 different manufacturing and assembly locations in five countries and sold across a network of distribution in 180 countries. Kia has over 51,000 employees worldwide and annual revenues of over $ 45 billion, according to the company.