South Korea’s Kia Motors on Thursday signed a memorandum of understating (MoU) with the Andhra government for setting up a greenfield automobile manufacturing facility at Erramanchi in Anantapur district, 150 kms from Bengaluru.
Kia Motors, the largest South Korean auto maker after Hyundai Motors, will invest about Rs 12,800 crore to set up the facility which is expected to create about 10,000 jobs. Kia will also set up a township along with a research & training centre at the facility that would spread over 536 acres allotted by the Andhra government. Work is expected to start by October and production is likely to begin by July 2019.
The MoU was signed at a ceremony in Vijayawada, in the presence of Andhra Pradesh chief minister N Chandrababu Naidu and Kia Motors president Han-Woo Park, and attended by top Kia Motors executives.
“The tie-up will give a major boost to AP’s efforts to emerge as an industrial manufacturing hub,’’ Andhra Pradesh industries secretary N Solomon Arokia Raj said. “This is a significant step in our efforts to turn Andhra Pradesh into an automobile manufacturing hub. It is a historic day and the strong bond between AP and Kia will endure,” Naidu said. This would be Kia’s first plant in India and seventh in the world.
“Construction of the new manufacturing facility will commence in the final quarter of 2017. The manufacturing facility is expected to begin production in the second half of 2019 and produce up to 300,000 units each year. Kia plans to produce a strategic compact sedan and compact SUV especially for the Indian market at the new plant, which will occupy around 23 million square feet and incorporate facilities for stamping, welding, painting and assembly. The site will also be home to numerous supplier companies’ facilities,’’ a statement from KIA said.
“We are delighted to announce that Kia’s newest manufacturing facility will be here in Andhra Pradesh,” said Han-Woo Park. “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,” said a statement by the company.
Furthermore, the region’s fast-developing supply chain network and skilled labour force were other key reasons for the new investment by Kia Motors. India is the fastest growing major new car market and the fifth largest in the world, with more than 3.3 million new cars sold in 2016. Forecasts suggest the country will become the third-largest car market by the end of 2020, the release added.