Kia Motors To Build It's First Indian Factory: A Move Made After Downtrend of China Sales

Apr 28, 2017 07:30 AM EDT | Hannah Jill

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Good news for Kia fans, Kia Motors signed a memorandum of understanding with the Indian government worth $1.1 billion for its first factory in the country. This move was made after hitting a 19 percent downswing in net profit for the first quarter of the year.

The sales reportedly dropped because of dealership issues and anti-Korean conflicts in China which affected its sales dramatically. It can be recalled that the company started having weak sales when the THAAD anti-missile system deployment was finally decided by the Korean government.

According to some press release, by the second half of 2019, Kia Motors will begin its production in the Anantapur district, Andhra Pradesh state. Many believed that it is a good move since India is a fast growing country and it could follow Hyundai's success in the country.

The India-based plant will be able to produce 300,000 cars yearly. Most likely compact cars and SUV will be prioritized in favor of the Indian market. The breakground might happen later this year.

Kia Motors sold 658,332 vehicles in January to March of 2017 compared to its 704,453 units sold for the first 3 months last year. Korean Joongang Daily quoted Kia Motors as saying that "increased sales of high-end models led to an increase in revenue but other conditions such as the strong won drove down the profit." This comment was made because although its revenue rose to 1.5 percent, its net profit fell 19 percent.

Meanwhile, Kia Motors is not the only automaker that is having some problems with its China Sales. Another South Korean automaker, Hyundai is said to be experiencing weak sales in the same country. Reports are even circulating that there are instances wherein they are not even receiving any customers at all. The same thing happened with Japanese auto brands in 2012 because of political and territorial issues. Things are better now and the auto brands were able to gain the market sales again.

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