Kia Motors will start operations in India with an FDI of Rs. 10,000 crore. South Korea’s second largest car maker and a brand with global presence, has shortlisted Andhra Pradesh to setup its manufacturing unit after a two-year, four state long feasibility study. Kia has chosen Penukonda in Andhra Pradesh’s Anantapur district, close to parent company Hyundai’s Sripeumbudur plant.
To be one of the biggest foreign direct investment in the country, the $1.6 billion investment will be divided into two stages. The first stage will witness an amount of Rs. 6,000 crore being pumped in, which will result in a production facility that can manufacture 3 lakh units per annum. While the first car could roll out by 2019, on April 13th, the Industries and Commerce department of Andhra Pradesh had issued government orders for acquisition of nearly 600 acres of land by paying Rs 10.5 lakh an acre “as a special case.”
Requesting anonymity, one of Hyundai’s vendors said, “We have already been intimated about understanding the logistics cost to Anantapur and accordingly quote the pricing in the future. They are yet to float the RFQ, but they are likely to have a portfolio of cars, including a small car, a sedan, and an SUV.” Another Hyundai vendor that may also supply to Kia revealed that the company has started discussing a project in South Korea codenamed SP2, which is likely to be a compact SUV based on the Hyundai Creta. Hyundai Motor India, which is utilising about 90 per cent of its capacity, may look at sharing the production facility to meet the high demand of its cars in India.