Kia Motors mulls India entry

Written by Agencies | fe Bureau | Mumbai | Updated: Jun 25 2010, 09:56am hrs
Kia Motors, a sister organisation of South Korean automaker Hyundai, is reportedly eyeing an India entry. The company plans to set up a plant in Chennai, near Hyundai Motor India's plant. The facility is expected to be ready by 2012 and will have an installed capacity of 3 lakh units.

Kias best-selling global model include the C-segment Cerato/Forte, B-segment Rio and Sportage compact sports utility vehicle, Sorento mid-size compact utility vehicle and Soul, the urban crossover. For the first five months of 2010, Kia sold 820,613 units globally, an increase of 38.9% year-on-year. Sales in China rose 92.9% for the period.

A Kia spokesperson was quoted in a report saying, We are conducting a feasibility study to select a site for the plant near Chennai.

Based on data from Hyundai Motor which entered the Indian market in 1998, we are estimating costs and time to build the plant, as well as examining demand forecasts and Hyundai's sales figures there, he was quoted in the report.

HW Park, MD & CEO, Hyundai Motor India, said, It is our sister organisation and its decisions are its own. If they want to enter they are most welcome. I have nothing more to add.

Hyundai operates two plants in Chennai with a combined annual output of 6 lakh units a year. The company is in the process of shifting the production of Hyundai i20 out of Chennai to its Turkey plant. This will free capacity for 50,000-odd units. The plant in Turkey has a capacity of 1 lakh units per annum. The company says tax benefits in Turkey prompted it to shift the production. Park added that with little investment, the capacity at Chennai cab rise to 6.7 lakh units a year.

Kia's move is motivated by the downturn in Europe, its largest export market and its strategy to expand in other markets. Even Hyundai Motor's European exports with 25-30% dip.

Of the total exports, Europe made up to 58%. However, it has seen a downfall and not recovered yet. We are expecting to grow faster in domestic market this year, said Arvind Saxena, director (sales and marketing), Hyundai Motor India.

The Indian auto market is expected to grow to 3 million units by 2015 to become the world's fourth largest, trailing only China, the US and Japan.

In May, Kia posted year-on-year sales rise in all regions. General markets, including regions of Central and South America, the Caribbean, Asia (excluding China), the Pacific, West Asia and Africa grew 59.3% (37,318 units), 28.9% grew by China (26,101 units), 19.5% in North America (37,162 units), 18.7% in Europe (includes figures from Western and Eastern European markets) 34,503 units and 5.0% in Korea (40,014 units).

The remaining regions have showed cumulative strong double digit rise in y-o-y sales.