Kia Makes Inroads into Indian Market with Small SUV

  • By Kim Seong-min

    February 08, 2018 13:24

    Kia unveiled its new concept car at an expo in India on Wednesday, making its debut in the world's fourth largest market with a population of 1.3 billion.

    Unveiled at the Auto Expo in Noida, India, which runs until next week, the SP is a small SUV exclusively targeted for Indian customers, and will be the first car to be produced in Kia's plant there, which will be completed in September next year.

    Some 3.21 million cars were sold in India last year with a growth rate of seven to eight percent a year. Industry watchers predict that India will take over Japan as the world's third largest auto market by 2020.

    Kia invested US$1.1 billion to build a plant in Anantapur, Andhra Pradesh that can produce 300,000 cars per year. Kia will establish dealership network this year, and start producing and selling cars in India when the plant is completed next year.

    "India levies a 60-percent tariff on foreign manufactured cars, so it is literally impossible to make inroads into the market without a local plant," said a Kia spokesman.

    Kia's SP concept SUV is on display at the Auto Expo in Noida, India on Wednesday. /Newsis

    Once Kia's plant begins to operate, the carmaker will produce 58 percent of its cars abroad, compared to 55 percent now, giving it a production capacity of 1.59 million cars domestically and 2.26 million overseas.

    India overtook Korea as the fifth largest automobile producer in the world in 2016, and the market is already heated with fierce competition with other global automakers. Maruti Suzuki, the leader in the Indian market, has the capacity to make 1.75 million cars a year locally, and local carmakers Tata and Mahindra can manufacture 890,000 and 750,000 a year. Renault-Nissan, Ford, and Toyota produce 300,000 to 400,000 cars there per year.

    Hyundai which claims the second highest market share there, already has a plant in Chennai which was built in 1996.

    With the release of the SP, Kia hopes to catch up with competitors in India. Small SUVs are popular there, with some 584,000 of them sold last year. Kia is targeting young customers, with plans to launch at least one new model every year over the next three years.

    "As Hyundai already has an annual capacity to produce about 650,000 cars there, Korean carmakers' market presence will be further boosted by Kia's new plant next year," said Lim Sung-sik at the Korea Trade-Investment Promotion Agency.

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