Published: Fri, April 28, 2017
Hi-Tech | By Merle Christensen

Kia to invest $1.1 billion to build its first India factory

Kia to invest $1.1 billion to build its first India factory

Kia sells a little more than three million vehicles a year from 14 manufacturing and assembly operations in five countries; it has annual revenue of $45 billion. "It is the result of the anti-Korean sentiment that flared up within China since late February and some rivals that launched marketing to exploit the anti-Korean sentiment", said Koo Zayong, a vice president at Hyundai Motor.

Kia and its sister company Hyundai Motor have seen sales in China, the world's biggest vehicle market, hammered by the fallout from a diplomatic spat between Seoul and Beijing over a USA missile defence system. The worldwide demand for Kia cars is growing and this is its latest step towards becoming a leading global auto manufacturer.

Andhra Pradesh Government has entered into an MOU with South Korea-based Kia Motors which is World's Fifth Largest Automobile Company to establish its first-ever plant in India.

Kia is looking for new areas of growth. The South Korean automaker's shares have actually been under pressure just recently due to issues about prolonged weakness in China, its greatest market, as South Korea continues with its strategy to deploy a USA anti-missile defense system in spite of China's opposition.

Volkswagen - the world's biggest automaker - announced a "strategic alliance" with India's Tata Motors last month, while Japanese rivals Toyota and Suzuki plan to team up to develop new technologies in the country.

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The Indian auto market is growing at a rapid pace and over 3.3 million new cars were sold in 2016. "With economies in emerging economics such as Russian Federation and Africa in recovery, the company will tackle those markets with models fit for locals", said a company spokesperson. Hyundai is second with around a 17% share.

"We believe it will be very hard for a new entrant", said Nitesh Sharma, a research analyst at PhillipCapital.

Indeed, big investment doesn't automatically translate into sales.

Revenue rose 1.5 percent over the year to 12.84 trillion won in the quarter, but net income tumbled 19 percent to 765.4 billion won.

"It depends if Kia would look to differentiate its product (sedan) from the taxi segment".

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