In a major boost to Andhra Pradesh Chief Minister N Chandrababu Naidu’s plans to develop an automotive hub, Korean company Kia Motors has decided to set up a base in the State with an investment of $1.1 billion.

A memorandum was inked by State Industries Secretary Solomon Arokiaraj and Kia Motors President Han-Woo Park, in Naidu’s presence, at Amaravati on Thursday.

The greenfield car plant, to come up on a 600-acre site at Penukonda, about 75 km from Anantapuramu, will be the South Korean company’s first unit in India. Factoring in investments by associates and vendors, the Kia project is likely to see overall investment of about $2 billion.

The construction of the new facility, with a capacity to produce 3 lakh units a year, will start in the last quarter of 2017, and production is likely to begin in the second half of 2019. The project is likely to create permanent and temporary jobs for about 11,000 people.

Kia plans to start selling cars produced at the new facility by the end of 2019.

Naidu, assuring all support to Kia, said: “I am happy Kia Motors has finalised its investment plans for India and has selected Andhra Pradesh. Automobile and auto components are vital thrust areas for the growth of the State.”

Han-Woo Park said, “The plant will enable us to sell cars in the world’s fifth-largest market, while providing greater flexibility for our global business. Worldwide demand for Kia cars is growing, and this is our latest step towards becoming a leading global car manufacturer.”

Over 3.3 million new cars were sold in the country in 2016, and forecasts are that it will become the third-largest car market by the end of 2020.

Kia plans to produce a compact sedan and compact SUV at the AP plant. The plant will occupy around 23 million sq ft and have facilities for stamping, welding, painting and assembly.

Founded in 1944, Kia Motors Corporation is Korea’s oldest manufacturer of motor vehicles. Kia rolls out over three million vehicles every year from it 14 manufacturing and assembly operations in five countries; the vehicles are sold in 180 countries. Kia has over 51,000 employees and annual revenues of over $45 billion.

For Naidu, this project is a big win as he has managed to pipTamil Nadu and Maharashtra, two of the biggest automotive hubs in the country, to the post.

He had tried to attract automotive companies to combined AP, during his tenure as Chief Minister from 1995 to 2004. Malaysian company Proton and Volkswagen were among the companies that were sounded out then.

Kia’s decision to zero-in Andhra Pradesh possibly turned on Isuzu setting up a plant at Sri City (close to both the Bengaluru and Chennai auto hubs), Hero MotoCorp and Apollo’s plans to head there, and AP’s top ranking among States on ‘Ease of Doing Business’.

Not only does Naidu plan to monitor the Kia plant’s progress personally, he has also appointed the District Collector as the nodal officer for the project.

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