Kia Motors on the fast track with India plans

The ecosystem turns distinctly Korean as you cross the Karnataka border and head towards Anantapur. You begin to see signs of Korean settlements, Korean boards/hoardings and ancillary units.

Now what could all this be doing in Andhra Pradesh? The answer comes quickly in the form of the imposing Kia Motors plant, which was set up in merely 15 months, a staggering achievement for any automobile company. Trial runs began earlier this week and the first model will hit the roads by July-August.

For the world’s eighth-largest car-maker, Anantpur is its fifteenth global plant and the one with tremendous potential going forward. After all, the action is happening in India, which is on its way to becoming the third-largest automobile producer in the world.

Implementation of the project in one of the most drought-prone districts of the State was no mean achievement. Clearly, a lot of the credit goes to Chief Minister, N Chandrababu Naidu, who personally supervised its progress.

The milestone has also come as a surprise to the locals who have been living long in these dry tracts. Today, they would see hope for their youth in earning a livelihood in this new automotive ecosystem on the lines of what has been experienced elsewhere in the country, be it in Chennai, Gurgaon or Pune.

Fast progress

Kia Motors inked the memorandum of understanding (MoU) with the AP Government in April 2017 and plant construction kicked-off in October-November. The framework installation ceremony was held in February 2018 and the trial runs have followed less than a year later.

Spread across 536 acres along the highway, the facility is truly a sight to behold in a district better known for its meagre resources and poor agriculture record due to lack of water. Things have clearly changed with a top global brand like Kia choosing to set up shop here.

If things go according to plan, Anantapur could just end up becoming a famous automotive reference point on the lines of Sriperumbudur, Oragadam and Maraimalai Nagar near Chennai, Chakan and Ranjangaon near Pune along with Gurgaon and Greater Noida in the National Capital Region.

Kia’s first offering will be the SP 2i, a sports utility vehicle based on the SP Concept that was showcased at the 2018 Delhi Auto Expo. This was the time the company’s pavilion drew massive footfalls, which clearly showed that it is not an alien brand in this part of the world. Kia may have taken its time entering India but the frenzied pace of activity shows that it is keen on making a strong statement here.

Han Woo Park, President and CEO of Kia Motors Corporation, who was present for the trial production event, said India would play a “singularly important role” in expanding the company’s global footprint. “Commencing trial production is a significant moment that we have been preparing for as we take on the challenges of future mobility across the country,” he added.

Over 300 robots are engaged in automating the press, body and paint shops with artificial intelligence technologies backing the system. Kia is aiming to be among the top five car-makers in the country by 2021. This means that over the next two-three years, it will go flat out in carving a position for itself in a market dominated by Maruti and Hyundai.

Kia has also signed up with the AP government to facilitate infrastructure for electric vehicles. As part of this initiative, it has supplied three options of the Nero model: electric, plug-in hybrid, and a hybrid. It has supplemented this with the Soul, which was handed over to the Chief Minister, and boasts of a 450-km range on a single charge.

Electric push

“Kia is taking a lead in the global eco-friendly vehicle market and we are confident of achieving the same in India. The new partnership with AP highlights how we can support the growth of EV infrastructure and uptake of eco-friendly vehicles,” said Kookhyun Shim, MD and CEO of Kia Motors India.

According to Manohar Bhat, Head, Sales and Marketing, the plant has been commissioned a couple of months ahead of schedule. “Along with two vendor parks, one close to the plant and another about 20 km away, the total investments will top $2 billion,” he said.

The plant’s capacity is 3,00,000 units annually and while the initial focus will be on the domestic market, exports will also be part of the business plan with about 10 per cent of the output intended for overseas markets.

SUV first

The decision to begin with an SUV is obviously based on the fact that this is one of the fastest growing segments in India. The Kia offering will take on established models from Maruti Suzuki, fellow Korean counterpart, Hyundai and so on . “After the roll-out of our SUV, we plan to come out with another model within six months thereafter and expect to have a portfolio of four-five models over the next 18-24 months,” said Bhat.

It will be interesting to see how Kia plans to pace out its India innings even while its aggressive intent is clearly there for all to see. In its favour is familiarity with a global brand, especially for today’s young Indians who travel around the world.

Additionally, the Korean association is not an issue for the current generation of car buyers, thanks largely to Hyundai, which literally pulled out all the stops to make a mark here. During the time of its entry over two decades earlier, not many people knew what Hyundai was till they experienced the heady mix of product, marketing and advertising.

Today, the Korean car-maker is the closest rival to Maruti and even though Kia is part of the same group globally, the two will steer clear of each other in the retail arena. Doubtless, there will be synergies at the back-end, which is only obvious given the tremendous manufacturing competencies Hyundai has built over the years that can be leveraged to good use for Kia too.

It will also be interesting to see what kind of customers will queue up to buy a Kia brand and if there will be the inevitable comparisons made to products from Hyundai. Beyond this Korean flavour, one will also have to see how China’s SAIC will go the extra mile in pushing the case for MG Motors in India.

The next decade will be exciting with new competitive dynamics panning out even while established players will hang on to their positions. Maruti is not going to give up its pedestal in a hurry but customers will be spoilt for choice. It will be an interesting tug-of-war for sure.

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