Kia Plans to In­vest $2 b Here to Build Plant, Sup­plier Base

Hyundai af­fil­i­ate ex­pects to cre­ate 3,000-4,000 jobs in 5 years; AP plant to be­come op­er­a­tional in ’19 as co aims to be among top 5 by ’22

The Economic Times - - Brands: Creating Desire - Nabeel.Khan@

timesin­ter­ New Delhi: Kia Mo­tors plans to in­vest $2 bil­lion ( ₹ 12,750 crore) in In­dia over the next two years to set up a man­u­fac­tur­ing plant and develop a sup­plier base, a top ex­ec­u­tive said. The af­fil­i­ate of South Korea’s Hyundai Mo­tor ex­pects its in­vest­ment to cre­ate 3,000-4,000 jobs here in the next five years.

Kia in April an­nounced that it would in­vest $1.1bil­lion to build a fac­tory in Andhra Pradesh’s Anan­ta­pur dis­trict. The ad­di­tional in­vest­ment will be to cre­ate the sup­plier base, said Tae-Hyun Oh, the chief op­er­at­ing of­fi­cer of its in­ter­na­tional busi­ness di­vi­sion. Kia’s mar­ket­ing bud­get will be out­side of this, he told ET.

Kia’s plant is set to be­come op­er­a­tional in 2019. The com­pany is aim­ing to be among the top 5 car­mak­ers in the coun­try by 2022. By that time, it is tar­get­ing to sell 3 lakh units a year, which will also be the plant’s op­ti­mal ca­pac­ity.

Kia, which has op­er­a­tions in 180 na­tions, was ab­sent from just two im­por­tant mar­kets un­til re­cently — Mex­ico and In­dia. It started op­er­a­tions in the North Amer­i­can coun­try last year and is now all set to roll out its first prod­uct from In­dia in the sec­ond half of 2019.

In­dia is a key mar­ket for global au­to­mo­bile com­pa­nies, as it is among a few that are still grow­ing at a fast clip. Though only a hand­ful of the nearly two dozen car man­u­fac­tur­ers op­er­at­ing in In­dia have achieved mean­ing­ful suc­cess, Hyundai has seen strong growth from the time it en­tered In­dia. The per­for­mance of the group com­pany has en­cour­aged Kia to tar­get large vol­umes here.

“In­dia is very im­por­tant for us to achieve our tar­get of 4 mil­lion to­tal sales glob­ally by 2020,” Oh said.

In 2016, Kia sold about 3 mil­lion ve­hi­cles glob­ally. Dur­ing Oh’s ten­ure, Kia has seen tremen­dous growth. Global sales ex­panded more than 65% and the brand value nearly tripled to $4.7 bil­lion since he as­sumed his cur­rent po­si­tion in 2010.

The car­maker will bring at least three mod­els by 2022 in In­dia, start­ing with a mid-size SUV. “We will pro­duce at least three mod­els and more in three years af­ter start­ing op­er­a­tion. The first model would be a mid-SUV to take on the likes of Hyundai Creta,” the ex­ec­u­tive said. The sub­se­quent prod­uct line-up will be a com­bi­na­tion of sedans, hatch­backs and SUVs, he added.

The com­pany plans to ex­ten­sively use lo­cally-sourced parts in the first midSUV, which it hopes will re­duce costs. “The prod­uct will be made in In­dia and made for In­dia,” Oh said.

Kia aims to have deal­er­ships across In­dia’s big cities by end-2019 and touch­points in at least 100 places by 2022. Kia has al­ready started a dealer road­show and the se­lec­tion process will end in Septem­ber. “Our main chal­lenge would be (brand) aware­ness; so our first fo­cus would be to­wards mar­ket­ing,” Oh said.

The com­pany has start­ing hir­ing for mar­ket­ing and other im­por­tant roles in In­dia. Kia is one of the lead­ing spon­sors of sports events and would look for a sim­i­lar op­por­tu­nity in In­dia. He said in In­dia the com­pany would adopt the same strat­egy that helped it grow quickly as a global brand. The pil­lars for suc­cess, Oh said, were a good prod­uct in terms of de­sign and style; qual­ity prod­uct; mar­ket­ing com­mu­ni­ca­tion; and a strong dealer net­work. “We sur­vived all the ups and downs be­cause we are strong on ba­sics,” he added.

The car­maker is go­ing to mainly tar­get young pro­fes­sion­als and wants to es­tab­lish it­self as a stylish and smart brand.


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