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Kia India to invest over INR 400 cr – Increase production to 4.5 lakh

With Sonet and Ertiga rival SUV in pipeline, Kia India needs the added production capacity at the plant

If Kia Motors’ sales momentum in India was not interrupted by the lock down, the South Korean automaker would have surpassed 1 lakh sales milestone by now. The company has been operational in the country for less than one year but has already established itself firmly. Achieving this success with a single product is not a easy feat.

With more interesting India-specific models in the pipeline, Kia Motors’ Anantapur manufacturing facility in Andra Pradesh is estimated to reach saturation sooner than later. The full fledged factory currently has an installed annual production capacity of 300,000 units which and is expected to achieve nearly full utilization by 2022.

There have been reports that Kia has been scouting for land to set up its second Indian plant, and that the state of Maharashtra has emerged as a front runner. However, the automaker’s top management downplayed these claims by stating that there is still room for extension at its existing plant. Moreover, the company has struck a good business relationship with Andra Pradesh government.

Kia Seltos concept
Kia Seltos concept

At a recent event organized by the AP state government, Kia Motors India’s chief executive officer Kookhyun Shim announced that the company will be investing USD 54 million (nearly INR 409 crore) in expanding its Anantapur factory. The expansion is expected to generate significant direct and indirect employment. As a part of the agreement with the state government, Kia hired around 85% of the workforce locally.

The CEO did not reveal the timeline of the investment but we expect the expansion work to start in a year’s time. The Anantapur production facility can be scaled up by up to 150,000 units per annum, taking the total installed production capacity after expansion to 450,000 units.

As of now, the automaker is gearing up to introduce the sub-4m Sonet compact crossover later this year. It will compete with Maruti Vitara Brezza, Tata Nexon, Mahindra XUV300, Ford EcoSport and Hyundai Venue, and is expected to emerge as an important volume booster for the brand. The model is also expected to be exported to several countries from India.

Next up would be a Maruti Ertiga-rivaling compact MPV which is slated to be ready sometime next year. The company could also come up with SUVs of different shapes and sizes to suit the Indian audience. It looks like the relatively new player in the highly competitive Indian passenger car Industry is going to maintain its stellar momentum for at least a few years to come.

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