KIA Motors makes its foray into Indian market

Brand Case Study #14

Kia Motors has announced its foray into the Indian car market. Hyundai’s sister brand will start making cars in India in 2019.

After exploring an entry into India for several years, Kia Motors, the sister brand of Korean carmaker Hyundai, today announced its foray into the country. Kia Motors has signed a MoU with the State Government of Andhra Pradesh, and under this agreement, the South Korean automaker will invest US$ 1.1 billion (INR 7,000 crore) in the country. The company will invest this money in building a manufacturing facility in Anantapur, Andhra Pradesh. Construction is set to begin in Q4 2017.

Kia Motors’ Andhra Pradesh facility will spread across 536 acres and have an annual production capacity of 3,00,000 units. With production commencing in the second half of 2019, it’s likely sales could kick off by the end of 2019 or in early 2020. Kia will also export cars from this facility, akin to Hyundai India’s business plan.

Kia Motors wants to achieve a localization level of 40% at launch and company is yet to announce its initial product line-up for India, as it hasn’t conducted a feasibility study yet but says that it wants to have three models in the country at launch: a mainstream model, a premium model and a brand image model. The exact product strategy will be announced after the end of the feasibility study. The Korean carmaker also specified plans to produce an India-focused compact sedan and compact SUV.

Kia also intends to differentiate itself from Hyundai and develop its own identity in India. When launched, there will be around 40 percent localization in the Kia models. The company will share powertrains and assembly lines with Hyundai for greater economies of scale.

The Kia Sportage SUV, which was seen testing on Indian roads, could be the premium model in the company's line-up. It is one of Kia’s oldest models on sale globally and is a direct rival to Tucson. In India, the vehicle is likely to share the Tucson 2.0-litre diesel. The other models likely to be introduced include the Picanto and the Rio hatchback. It could also bring to India the recently unveiled Kia Stinger, which will act as a brand builder. The Stinger is a rear-wheel-drive sports sedan powered by a 3.3-litre, twin-turbocharged V6 engine making 370hp.

This is good news for the automobile enthusiasts and the motoring community of India as KIA will bring a lot of competent products from its impressive international range.