S Korean Kia Motors to invest $1.1 billion on first Indian plant

Kia Motors is lining up around $1.1 billion (over Rs 7,000 crore) to set up a manufacturing plant in India where it plans to roll out a compact SUV and a compact sedan by 2019-end.

The South Korean firm, part of the Hyundai group, will sign a memorandum of understanding (MoU) with the Andhra Pradesh government to build a new plant in Anantapur district.

Construction of the new facility, Kia's first in India and representing around $1.1 billion investment, will commence in the final quarter of 2017, the company said in a statement. The facility will have a capacity to produce up to 3 lakh units each year and is expected to start production in the second half of 2019. Local sales of cars produced at the new facility will start towards the end of 2019, the company said.

Kia plans to produce a 'strategic' compact sedan and compact SUV, especially for the Indian market, at the new plant, which will occupy around 23 million square feet and incorporate facilities for stamping, welding, painting and assembly.

The site will also be home to numerous supplier companies' facilities, Kia said.

"We are delighted to announce that Kia's newest manufacturing facility will be here in Andhra Pradesh," Kia Motors President Han-Woo Park said. It will enable Kia to sell cars in the world's fifth- largest market while providing greater flexibility for the company's global business, he added.

"Worldwide demand for Kia cars is growing and this is our latest step towards becoming a leading global car manufacturer," Park said.

The fast-developing supply chain network in the region and skilled labour force were other key reasons for the new investment by Kia Motors, the statement said.

India is the fastest-growing major new car market and the fifth-largest in the world, with more than 3.3 million new cars sold in 2016.