Kia Motors ties up with parent Hyundai to drive into India

New Delhi: Kia Motors, a subsidiary of South Korean car maker Hyundai Motor Company, is gearing up to enter the Indian market, but as a competitor to Hyundai Motor India Ltd.

At the parent level, Kia’s management in South Korea is collaborating with Hyundai’s India team to set up its local operations—from establishing a plant and other infrastructure to selecting vendors and dealers.

In its quest to break even as early as possible, Kia Motors India will also start exporting engines and other components to different geographies, three people directly aware of the development said.

The parent is also looking to exploit the synergies between Kia Motors India and Hyundai’s subsidiaries, Mobis and Globis, operating in India.

Kia Motors India is expected to start production at its Andhra Pradesh plant by mid-2019. It will first start production of a compact utility vehicle that was showcased at the Auto Expo.

Though the firms will compete with each other, there will be some collaboration, especially during the initial years, according to one of the three people mentioned above.

“The management in South Korea, tasked with the responsibility of setting up Kia’s operations in India, is actively consulting its counterparts in Hyundai in India,” said the first of the three people mentioned above. “This is in the domain of selecting vendors and dealers for the Indian market since some in the Hyundai management have a really good understanding of the Indian market. Both parties are actively in touch for setting up the plant as well.”

Mobis, which manufactures auto spare parts, and Glovis, which caters to the logistics space, will collaborate with Kia Motors India. “Kia Motors will need some of the subsidiaries in India to get a hold on the market,” said the second person on condition of anonymity. “They might be competing with Hyundai, but these collaborations were expected and will help Kia start on a positive note.”

“Glovis and Mobis are part of the same Hyundai-Kia automotive group and Kia Motors India will draw synergies from its global associations wherever required. Kia Motors India has a desire to become a significant player in the Indian market and will use its Indian facility to manufacture fully finished automobiles and spare parts primarily for the Indian market,” said the spokesperson of Kia Motors India, in response to an email sent on 31 May.

Media  had reported in March about Kia Motors’ plans to introduce its electric vehicles, Niro and Soul, in India given the availability of infrastructure for electric mobility in the country.

Kia Motors India will have an annual capacity of 300,000 units and the company plans to exhaust the capacity in the next three-four years.

An email query sent to Hyundai Motor Company remained unanswered till the time of going to press.

source LiveMint