Kia invests $1 billion to build cars in India

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While Kia's revenue rose 1.5 percent on-year to 12.8 trillion won ($11.3 billion), its net profit fell 19 percent to 765.4 billion won, the company said. The manufacturing facility is expected to begin production in the second half of 2019 and produce up to approximately 300,000 units each year. Kia is also stressing on differentiating itself from its owner company - Hyundai, in the Indian market.

Kia is the latest automobile manufacturer to bet big on India-Hyundai Motor Co., Ford Motor Co., General Motors Co., Toyota Motor Corp. and Honda Motor Co. all are battling for a bigger share in the fast-growing market. The Korean vehicle maker will invest close to Rs 7,000 crore to build the facility with an annual production capacity of 3 lakh units.

Kia Motors' new factory will be spread over 536 acres (2.16 sq. kms) and will have a manufacturing operation that incorporates stamping, welding, painting and final assembly facilities.

Hyundai Motor projected a progressive earnings recovery after publishing a smaller-than-expected 21 percent drop in quarterly profit as sales of higher-margin vehicles cushioned the impact of a US recall and earnings decrease in China.

SAIC, biggest auto maker in China, and France's PSA are also preparing for an India entry.

Kia's interest in entering India with a local manufacturing facility has been in the news for quite some time now.

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Hyundai Motor is the second largest auto maker in India behind Maruti Suzuki India and analysts expect Kia to use some of Hyundai's existing supply chain network.

It remains to be seen how the company positions its vehicles in India where sister firm Hyundai already sells several vehicles in the mass segment. Forecasts suggest the country will become the third-largest vehicle market by the end of 2020.

"It will enable us to sell cars in the world's fifth largest market", Kia Motors president Han-Woo Park said in a statement.

Russia, Brazil and India were the bright spots for Hyundai in the first quarter, registering sales increases on the back of demand for the Creta SUV.

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