South Korea’s Kia Motors Plans to Build an Auto Plant in India

Are there really plans from Kia Motors to build an auto plant in India?

A major industry buzz was created recently following reports from South Korea’s main daily business publication Maeil Business Newspaper, which announced Kia Motors Corporation’s plans of building a 3,000,000-capacity plant in the gujarat state of india, with construction to begin during the first half of 2011. The report was taken up by most business and industry blogs and websites.

A similar buzz was created in June last year when another South Korean newspaper, Chosun ilbo, also reported Kia Motors’ plans of building a car plant starting in 2012, adding that a feasibility study was already being conducted to identify a location near Hyundai Motors’ Chennai plant. The report also indicated that Kia Motors was making cost and time estimates for the plant’s completion based on data coming from Hyundai Motors (Kia Motors is part of the Hyundai group).

However, a report from the Wall Street Journal announced a regulatory filed statement from Kia Motors, claiming that the company had not yet considered building a factory in india. Spokespersons from Kia Motors stated that Kia Motors was still contemplating on whether to launch its automobile products in india but that it was keen on finalizing plans before they might lose ground from international and local competition.

A Brief History of Kia Motors

Kia was formed in 1944 as a manufacturer of bicycles and industrial products, which later diversified into the automobile and truck manufacturing industry. The name was derived from the Korean term for “arise from Asia.” Development was severely hindered by the Korean War, but it eventually recovered during South Korea’s economic renaissance from 1960 to 1980.

Kia Motors Corporation started out as one of South Korea’s giant groups of companies, or what were locally called chaebols. it was also the second largest South Korean manufacturer of cars and trucks before being forced into receivership by the Asian financial crisis. Hyundai motors eventually bailed the company out in 1998 and obtained a 51 percent Kia Motors stake.

During the last decade, Kia Motors has been focused on pursuing globalization, and it started building manufacturing plants in various locations around the world, including a Chinese plant in 2002, a SlovaKian plant in 2006, and its latest plant in georgia, America, the construction of which began in November of 2009. The company is planning to further expand operations into various major markets, and opening a plant in india will definitely improve its global reach.

Kia Motors’ Current Performance and Plans for India

2010 was marked as the best year for South Korea’s automotive industry with a strong 25.7% increase in sales worldwide – the industry’s highest ever. Kia Motors led the pack with a 38.9% increase in sales by selling 484,512 cars locally and exporting 1,647,019 to global destinations, marking a new milestone of two million car sales in one year.

in its plans to introduce its automobile products in india’s market, Kia Motors is expected to leverage Hyundai Motors Corporation’s strong presence in the country. However, Hyundai’s two plants on the outskirts of Chennai will not have the capacity to accommodate Kia’s production. Still, Hyundai Motors india, Ltd already has a strong network and the capacity to support Kia with infrastructure, component and raw material needs as well as support for its back-end and logistics operations.