Hyundai Silent on Reports Kia Plant Coming to India

Hyundai Motor Group is not responding to detailed media reports about plans by the automaker’s Kia affiliate to build its first automotive plant in India.

Some of the reports state Kia will build a 300,000-unit plant in Penukonda in the state of Andra Pradesh with an initial investment of Rs60 billion ($929 million).

A second-phase expansion, depending on market conditions, is being considered.

That would raise total investment to Rs103 billion ($1.6 billion), with capacity doubling to 600,000 vehicles.

Media in Andra Pradesh report the state last week acquired 600 acres (240 ha) of land for the plant two days after meeting with a Hyundai Motor team which examined the proposed site.

A Hyundai spokesperson tells WardsAuto “no concrete plans have been finalized” and the automaker cannot comment on a potential location, investment amount, capacity – or even confirm Kia plans to build the plant.

There has been no official denial of the reports.

Kia currently does not sell any vehicles in India, and its Hyundai Motor affiliate’s two plants in Chennai produce no Kia-badged vehicles. Nor does Kia export vehicles to India because of the high tariffs on completely built-up imports.

Kia has been actively investigating an India production location for much of the past two years so it can tap into the world’s fifth-largest car market.

The country’s car market grew 9.3% to about 2.1 million units in calendar 2016, up 9.3% from prior-year, according to WardsAuto data. Light-truck sales grew 8.5% to 1.3 million units.

Hyundai is well-entrenched in India, ranking No.2 in light-vehicle sales in 2016 and seeing the Creta become the country’s best-selling CUV while joining the 10 best-sellers in its first full year on the market.

Some analysts believe the Kia plant also will produce vehicles for Hyundai, whose Chennai plants have combined capacity of 650,000 vehicles and are running flat-out. In calendar 2016 they produced 660,000 vehicles, of which about 160,000 were exported.

The Kia plant site acquired by the state is some 215 miles (345 km) northeast of Hyundai’s Chennai plants. The new Kia plant would give the two automakers capacity of 950,000 vehicles in India, with an additional 300,000 units of capacity available depending on demand.

Hyundai India established its first plant in Chennai in 1998 and its second plant in 2008.