The new plant will produce 300,000 units annually, including compact cars designed for the Indian market alongside sport utility vehicles.
Kia's global production capacity now stands at over 3 million units while Hyundai's is around 5 million vehicles annually.
Kia signed a memorandum of understanding (MoU) with the Andhra Pradesh government on Thursday in this regard. The worldwide demand for Kia cars is growing and this is its latest step towards becoming a leading global auto manufacturer.
Kia Motors is lining up around United States dollars 1.1 billion (over Rs 7,000 crore) to set up a manufacturing plant in India where it plans to roll out a compact SUV and a compact sedan by 2019-end. Kia will also export cars from this facility, akin to Hyundai India's business plan.More news: USA lawmakers look to Trump administration briefing for clear North Korea strategy
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"Apart from selling to customers in India, global auto makers are also looking at how to use India as base to design and source parts and now Kia is on that journey".
South Korea's Hyundai Motor posted a 21 per cent fall in quarterly net profit, dragged down by a USA recall and sales declines in China stemming from political tensions. "This is Kia Motors's ultra-mega integrated project which will add to the AP's fast developing automotive ecosystem and will have a spin-off effect on the industrial development and employment in the region", the official pointed out. "We are still in the process of detailed planning for the India plant", a spokesperson said in response to e-mailed queries. "Hyundai's Chennai plant is 390 km from our site".
India continues to be one of the world's most promising markets as an increasing number of families can afford cars as incomes rise.
India saw domestic sales grow a little more than nine per cent to three million vehicles in the year ended March 2017. Forecasts suggest the country will become the third-largest vehicle market globally by the end of 2020. "With economies in emerging economics such as Russian Federation and Africa in recovery, the company will tackle those markets with models fit for locals", said a company spokesperson.