Kia Motors says to invest $1.1 billion to build Andhra Pradesh factory

South Korean vehicle maker Kia Motors said Thursday it will build a new 1.1 billion plant in India, marking its entry into one of the world's fastest growing markets as sales in neighbouring China have sagged.

The world's fifth-biggest automaker together with affiliate Kia Motors 000270.KS reported on Wednesday a first-quarter net profit of 1.33 trillion won (£921.82 million), its 13th straight year-on-year quarterly fall.

Production at the factory in Anantapur district, Andhra Pradesh state, would begin in the second half of 2019, the company said.

The company plans to produce a compact sedan and compact SUV especially for the Indian market at the new plant.

China's economic retaliation against South Korea for THAAD has seen profits plummet at Hyundai Motor.

Worldwide, Hyundai sold fewer than 1.1 million cars in the first quarter, 1.6 per cent fewer than the same period past year.

After a series of speculations regarding its plans to enter the Indian vehicle market, Kia Motors has now officially announced its India entry.

Local sales of cars produced at the new facility will start towards the end of 2019, the company said.

Koo said Hyundai will launch three new China-tailored models, including a compact SUV, this year and an electric auto on the mainland to help recover sales.

The plant, to come up on a 600-acre site at Penukonda, about 75 km from Anantapuramu, will be the South Korean company's first unit in India and the seventh in the world.

The Indian vehicle market is growing at a rapid pace and over 3.3 million new cars were sold in 2016. The plant will have an installed initial annual capacity of 300,000 units.

Kia Motors engaged in talks with several other states like Gujarat, Madhya Pradesh, and the neighboring Tamil Nadu as well.

In March, the Korean OEM posted month-on-month sales increases in the domestic Korean market (21.6 % growth with 47,621 units sold) and overseas markets (4.1% growth with 190,601 units sold).

The statement speaks volumes as it also points to India becoming a future hub for Kia cars worldwide.

The Kia Sportage is a popular crossover model in the global market.


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