Kia Motors Signs Agreement to Build First Manufacturing Plant in India

May 1, 2017

Jennifer Shuttleworth

A recently released teaser image of the upcoming Kona crossover from Hyundai—a version of which industry is speculating could be built at Kia's new Andhra Pradesh plant in India (image: Hyundai).

Kia Motors recently signed a US$1.1 billion investment agreement to build its first manufacturing facility in India. At a late April ceremony, the automaker completed a memorandum of understanding (MOU) with the State Government of Andhra Pradesh, India to build the new manufacturing facility in the Anantapur District.

“We are delighted to announce that Kia’s newest manufacturing facility will be here in Andhra Pradesh,” Han-Woo Park, President of Kia Motors, said in a release announcement. “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.”

Construction of the new facility will begin in the fourth quarter of 2017. According to Kia, the assembly plant is expected to begin production in the second half of 2019 and build up to approximately 300,000 units annually.

Kia said it plans to produce a compact sedan and compact SUV especially for the Indian market at the new plant. Industry speculation indicates the compact SUV earmarked for the Indian plant could be a Kia-badged version of the Kona crossover due to soon be launched by Kia affiliate Hyundai.

The new plant will occupy around 23 million ft² (2.16 km²) and incorporate facilities for stamping, welding, painting and assembly. The site will also be home to numerous supplier companies’ facilities, says Kia.

India is the fastest-growing major new-vehicle market and the fifth-largest in the world, with more than 3.3 million new vehicles sold in 2016. Forecasts suggest the country will become the third-largest car market by the end of 2020.