Reported By:
| Edited By: Neha Rishi |Source: DNA |Updated: Mar 17, 2018, 04:28 AM IST
Kia Motors, the second-largest carmaker of South Korea, is planning to make its way into the Indian market, according to a news report in the South Korean newspaper The Chosun Ilbo.
The report stated Kia Motors, in which Hyundai Motor Company holds about 35% stake, is seeking to build a plant in India to produce 3 lakh vehicles a year, starting from 2012.
“We’re conducting a feasibility study to select a site for the plant near Chennai,” the report quoted a Kia spokesperson as saying.
“Based on data from Hyundai Motor, which entered the Indian market in 1998, we’re estimating costs and time to build the plant, as well as examining demand forecasts and Hyundai’s sales figures there,” the spokesperson added.
It is believed that Kia’s move has been motivated by its wish to find an alternative market to Europe, the destination of the majority of its exports, where demand has been sluggish owing to the recession.
However, when DNA Money contacted Kia’s Asia-Pacific headquarters, a spokesperson , who did not wish to be named, denied any plans for India.
According to industry experts, a plant with a capacity of 3 lakh units annually should cost around Rs 4,500 crore. Since most of the ground work is already done for Kia due to the presence of Hyundai, it would not have to make large investments for its vendor base and distribution network.
However, since the brand is new to India, the company would typically look at an investment of Rs 400-500 crore in brand building and an additional Rs 1000 crore would have to be shelled out by the ancillary units to ramp up capacity to meet additional demand from Kia.
In August last year, on the sidelines of the Auto Expo, the earlier managing director of Hyundai Motor India, H S Lheem had mentioned that the company’s research and development facility in Hyderabad will not only cater to its (Hyundai’s) future models but also those of its sister concern, Kia Motors.
Kia, which has range of around 20 products in its portfolio right from passenger cars to SUV/vans to commercial vehicles, is likely to bring in its compact cars and SUVs to the Indian market. The company sold 8.2 lakh vehicles worldwide in January-May 2010.
