Financial Daily from THE HINDU group of publications
Friday, Feb 03, 2006
Kia Motors likely to set up plant in India
Chennai , Feb. 2
KIA Motors Corporation of Korea, a part of the Hyundai-Kia Automotive Group, is thinking of setting up a plant in India. It is reliably learnt that Tamil Nadu tops the list of States that Kia may consider as a location for its plant.
Senior officials of the group have reportedly looked at some sites around Chennai and will undertake a more detailed study of the market before taking a decision. The company is also expected to look at sites in Andhra Pradesh, Karnataka and Maharashtra.
Hyundai Motor India, a wholly owned subsidiary of Hyundai Motor Company, has its plant at Irrungatukottai, about 50 km to the west of Chennai. Kia officials have looked at some sites in the vicinity of this plant, it is learnt.
Kia Motors' plan is to make its India plant, as and when it materialises, a manufacturing hub. Which means that the plant will be used to cater to the export market too. There have been reports that Kia Motors is keen to enter the Indian market with its own brand, although officials of Hyundai Motor Company, the parent of Hyundai Motor India Ltd, have said that there was no need for both brands in India, when the Hyundai brand had become well established.
Mr Mong-Koo Chung, Chairman, Hyundai Motor Company, who is scheduled to visit the Indian subsidiary next week, is expected to discuss the possibility of Kia entering India with senior Hyundai officials working here.
Mr Chung will be visiting Hyundai Motor India as part of his annual review of the Indian subsidiary, which will also roll out its millionth car this month.
The group had at one time toyed with the idea of entering the commercial vehicles business and had almost zeroed in on a location near Pune.
However, the group now believes that it would be better off concentrating on the growing passenger car market rather than spread its resources thin.
The vehicles: Kia Motors manufactures a range of passenger cars, recreational vehicles, utility vehicles and commercial vehicles. It produces over 1.1 million vehicles a year and in 2005 exported 8,11,676 vehicles, which included 4,17,920 cars.
Picanto, a hatchback, led the passenger car sales in the overseas markets with sales of 117,999 units, according to information available on Kia's Web site.
The company's cars include Picanto (a hatchback), Rio, Cerato and Magentis, all sedans.
Kia's proposal to invest in a plant in India comes at a time when Hyundai Motor India is expanding capacity of its plant.
Hyundai officials have said that the Hyundai group would have a combined capacity of a million vehicles by 2010.
Hyundai Motor India is expanding its capacity from 2,50,000 units a year to 400,000 units. The expanded capacity will be ready by mid-2008.
It is understood that Hyundai and Kia will continue to have distinct brand identities in the country, even after Kia launches its products here.
According to information available on Kia's Web site, its plant in Slovakia will be ready in the second half of 2006 and the second plant of its joint venture in China by 2006-end. Kia has 16 manufacturing and assembling operations in 12 countries.
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