South Korea’s Kia Motors Corp is expected to pick a site next month for its first factory in India, stepping up plans to start making cars in one of the world’s fast-growing auto markets, two people familiar with the matter said.
The move would enable Kia to leverage the existing supplier base of its affiliate, Hyundai Motor Co, India’s second-biggest automaker by sales.
The proposed factory would start production in 2019 and eventually have capacity to make 300,000 Kia vehicles per year, one of the people told reporters — a major bet for a firm that sold 3.05 million vehicles last year.
The South Korean pair, jointly the world’s No. 5 automaker, are chasing new business after missing annual targets last year for the first time since the 2008 global financial crisis.
Their combined sales fell 2 percent in first half of this year, hit by weakness in markets like China, Russia and Brazil.
India is likely to become the world’s third-largest car market by 2020, according to IHS Inc, up from fifth place now, with annual sales nearly doubling from 2.7 million last year to about 5 million vehicles.
The size of Kia’s investment has yet to be decided, one of the people said, declining to identify which models would be produced at the factory.
Three sites are under consideration for the plant, and Kia might announce the plan in September after deciding on a location next month, the second person said.
The states of Andhra Pradesh, Maharashtra and Gujarat have all been wooing Kia, according to two other people with knowledge of the matter.
One of the two, an official with the Andhra Pradesh administration, said the state — which neighbors Tamil Nadu, home of Hyundai’s existing plants near Chennai — is the front-runner.
Kia on Thursday said in a statement to reporters that it was “continually evaluating potential locations for overseas manufacturing facilities, including India, to secure additional engines for future growth. However, as of now no concrete plans have been finalized.”
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