Why Kia Motors Left Tamil Nadu

On April 27, Kia Motors made a $1.1 billion investment announcement for a new factory in Andhra Pradesh’s Anantapur district.


revised on:

On April 27, Kia Motors announced that it would invest $1.1 billion in a new facility in the Andhra Pradeshi district of Anantapur.

According to a Chennai businessman, Tamil Nadu officials wanted bribes in order for the company to be allowed to establish a base in the state, which is why the South Korean manufacturer Kia Motors chose to locate its factory in Andhra Pradesh.

On April 27, Kia Motors revealed its $1.1 billion investment for a new manufacturing in Andhra Pradesh’s Anantapur area.

Two days later, Tamil Nadu legislators allegedly demanded “a very substantial bribe” in a Facebook post, according to Kannan Ramasamy, managing director at Chennai’s Infratech Infrastructure Services.

Does Kia Motors intend to relocate there?

According to Kia Motors, a South Korean automaker, there are no plans to move the $1.1 billion production facility from Anantapur, Andhra Pradesh, to Tamil Nadu. By the end of this year or early, the company intends to increase its Andhra Pradesh production capacity from two lakh units per year to three lakh units per year. In addition, the Anantapur facility, one of the company’s most cutting-edge facilities, is set up to produce electric vehicles.

The business referred to a Reuters article on the planned relocation of Kia Motors India’s facility from Andhra Pradesh to Tamil Nadu and said it was unfounded. Kia has a long-term commitment to the Indian market, and we invested $1.1 billion in a cutting-edge production facility there. We are on the correct track to utilize the facility’s maximum capacity and do not currently have any intentions to move our production plant from its current site. We will keep providing our esteemed customers in India with top-notch, produced in Anantapur automobiles and cutting-edge mobility experiences, a company spokeswoman declared in a statement.

Kia visited Andhra Pradesh for what purpose?

  • In December of last year, Kia Motors opened its Andhra Pradesh plant.
  • According to reports, Kia and Tamil Nadu are discussing moving its facility.
  • According to reports, Kia is dissatisfied with the reserve of 75% for local kids in private enterprises.

In December 2019, Kia Motors celebrated the opening of its first facility in India in the state of Andhra Pradesh. The factory, which Kia started constructing in 2017, was inaugurated by Chief Minister YS Jagan Mohan Reddy. It took two years for the first Kia facility in Andhra Pradesh to start producing cars, but recent rumors indicate that the South Korean automaker may be considering moving its plant to the nearby state of Tamil Nadu, where its sister company Hyundai maintains all of its facilities.

The reports indicate that there is a strong chance of moving the production plant, despite Kia Motors’ official denial, unless the Jagan Mohan administration takes immediate action.

The sole active industry in Andhra Pradesh at the moment is the Kia plant. Kia had received special incentives and basic infrastructure to set up the plant in Anantpur while Chandrababu Naidu was in office.

After this factory, Naidu planned to add further sub-ancillary and industrial units. However, after the government changed in 2019, the new administration led by YSR Congress Party chief YS Jagan Mohan Reddy implemented a policy requiring businesses to reserve 75% of the positions for local Andhra Pradesh youths.

It has proven to be a challenging policy for many organizations to follow. According to reports, Kia Motors is quite unhappy with the private sector’s job reservation program. This compromises the selection of the most qualified applicants for the open opportunities.

In his remarks during the inauguration, Jagan Mohan Reddy had stated: “Here, Kia Motors has excelled itself. Once fully operational, this factory will be able to provide 11,000 direct jobs and another 7,000 jobs through ancillary units.”

The Kia facility, which cost $1.1 billion to build, is a significant employer in Andhra Pradesh’s Anantpur district. There are 12,000 direct and indirect jobs at the Kia facility.

If Kia truly transfers its production to Tamil Nadu, it will be a huge loss for the state of Andhra Pradesh and will have a detrimental impact on job creation and development. Hyderabad, the center of information technology, is now a separate state called Telangana, leaving Andhra Pradesh with no income from it.

The sole remaining source of income is farming, therefore finding new sources of income is crucial for Andhra Pradesh to maintain a stable economy. The two most underdeveloped regions in Andhra Pradesh were Anantpur and Rayalseema.

Furthermore, if Kia relocates its plant outside of the state, it will undoubtedly damage Andhra Pradesh’s reputation as a pro-industry state and have a negative effect on the initiative to enhance the state economy by incentives to major corporations.

However, the Andhra Pradesh government denied the reports, according to Rajath Bhargava, the special chief secretary for industries, investments, and commerce “The news from Reuters, which covered the negotiations between Kia and the Tamil Nadu government, is untrue. The Andhra Pradesh government and KIA are cooperating.”

The factory occupies 536 acres of space. In 2019, production commenced. Three lakh automobiles can be produced here annually.

The Jagan Mohan Reddy government’s effort to evaluate contracts with international corporations to the point of renegotiating financial and tax advantages is also claimed to have spooked Kia. Japan also voiced this issue.

Kia Motors is leaving Andhra Pradesh, right?

HYDERABAD: On Friday, Kia Motors India refuted rumors that it might relocate its Andhra Pradesh plant to the neighboring state of Tamil Nadu.

According to reports, Kia Motors was negotiating with the government of Tamil Nadu to move its facility from Anantapur to the neighboring state for a number of different reasons.

The Andhra Pradesh government, led by Chief Minister YS Jagan Mohan Reddy, has been fully supporting the Korean automaker, according to a statement from the firm.

Kia has established a long-term commitment to the Indian market and invested USD 1.1 billion in the Anantapur manufacturing facility. We will keep providing our esteemed consumers in India with top-tier, produced in Anantapur automobiles and cutting-edge mobility experiences. stated Kia.

Three lakh automobiles may be produced annually at the Anantapur factory, which occupies 536 acres. Both electric and hybrid automobiles can be made at the factory.

Kia is made in India, right?

  • Production at Kia India is increased to 3 lakh vehicles annually.
  • Adds a third shift to the manufacturing plant in Anantapur.
  • A rise in production will aid in meeting India’s increasing demand for Kia vehicles.

In response to rising demand, Kia India has introduced a third shift to the Anantapur facility, enabling it to reach its 3 lakh unit annual manufacturing capacity. The main goal of this is to shorten the wait time for reserved cars, which has been particularly annoying for customers in light of the worldwide semiconductor crisis.

“We are overjoyed to announce the start of third shift at our Anantapur factory. To reduce Kia car waiting times and better meet the strong demand in both local and international markets, we have added personnel and coordinated resources. India is a key market for Kia internationally, and all of our products have enjoyed a resounding success here. As a devoted automaker, it is our responsibility to ensure that our customers receive their orders more quickly, and the start of third shift will do just that. Managing Director and CEO of Kia India, Tae-Jin Park, commented on the news.

Since production at the plant began in August 2019, Kia India has achieved success in India, producing more than 5 lakh vehicles. Four lakh of them have been sold in India, while the remainder have been exported. In 91 nations in the Middle East, Africa, the Americas, and Asia, Kia exports automobiles. In comparison to other manufacturers, it also retains the majority of the market for utility vehicle exports.

The rise in output is encouraging for India’s automotive sector, which has been plagued by the global shortage of semiconductors. The Kia Carens, the Korean automaker’s most recent model to be offered in India, has been well-received, with the business seeing solid bookings.

Is Kia profitable in India?

The one, two, and three lakh domestic sales milestones were all quickly attained by Kia India. The company recently reported total sales of 5 lakh units (domestic and foreign). In just 2.5 years, Kia has a market share of roughly 6% and is one of the top 5 manufacturers in India in terms of sales.

It is always battling Mahindra Auto for the fourth position. Kia India announced that sales in February were up 8.5% on an annual basis. In February, Kia sold 18,121 units as opposed to 16,702 in the same month in 2021. Despite a slight decline in sales from January 2022,

With 6,575 units, the Kia Seltos continued to lead Kia’s overall sales, followed by the 6,154 and 5,109 units produced by the Sonet and the Carens. The corporation is reducing sales because it claims that the lack of semiconductors is still a worry. The manufacturer has began the third shift in India and plans to build more than 3 lakh vehicles this year.

Ford left India, why?

Ford India declared on September 9, 2021 that it is “restructuring” its Indian operations. This entails ceasing production of all previous models, closing the Gujarat and Tamil Nadu manufacturing facilities, and effectively leaving the Indian car industry. There have been enough discussions about what this means for the sector and the difficulties it will bring to dealerships in terms of employment losses, livelihood disruptions, and financial instability. However, it is also crucial to talk about the effects on the Indian customer, who ranks as one of the chain’s most significant stakeholders.

This information was released the day before Ganesh Chaturthi (which marks the beginning of the festive season, a period considered auspicious for buying cars, gold, property etc). However, this Ganesh Chaturthi was anything but fortunate for Ford dealers and customers. Dealers were left to handle irate and perplexed clients who were canceling reservations, requesting refunds, and refusing to accept deliveries. Before buying a car, people consider price, brand, fuel efficiency, after-sales service, and resale value. The majority of vehicle purchases are financed. Given the angst that followed Ford’s announcement, it is evident that most customers would not have chosen to purchase a Ford vehicle if they had known the company was closing. However, they are now stuck with a product whose future is undetermined and which they have already paid a significant amount of money for.

Who is the legitimate Kia owner?

The Hyundai Motor Group, which includes the passenger car brands Hyundai and Genesis, also owns Kia. Together, they currently rank behind Volkswagen, Toyota, and General Motors as the fourth-largest automaker in the world.

  • As a manufacturer of steel tubing and bicycle parts, Kyungsung Precision Industry was established in 1944 and is now the oldest automobile manufacturer in South Korea. It also produced the Samchully, Korea’s first locally constructed bicycle, in 1951. In 1957, it started producing Honda motorbikes under license, and in 1962, Mazda vehicles were also produced under permission. The alliance with Mazda included automobiles in 1974. Kia also produced Fiat and Peugeot vehicles under license in the late 1970s and early 1980s. Only after it began producing automobiles in collaboration with Ford in 1990 did its own brand begin to gain traction (and therefore Mazda, which Ford used to control).
  • When Kia Motors America was established in 1992, the brand entered the fiercely competitive US market. Some of the early models that contributed to the brand’s establishment included the Sephia and Sportage.
  • When Kia filed for bankruptcy in 1997 under the shadow of Asia’s financial crisis, Ford made an attempt to raise its modest ownership position in the automaker. Ford, however, lost out to a major Korean automaker! In 1998, Hyundai acquired a 51 percent share in Kia and gained control of the firm. While Kia is a division of their shared parent company, Hyundai Motor Group, Hyundai Motor Co. now holds a 33.88 percent ownership.
  • When Kia strengthened its focus on Europe and engaged former Audi designer Peter Schreyer as the company’s design manager, a significant turnaround occurred. This gave rise to Kia’s “Tiger-Nose” design philosophy, which had a similar impact on that brand’s global sales as Hyundai’s Fluidic-Sculpture had on its. Additionally, Schreyer was promoted to President of the Hyundai Group and Chief Designer as a result.
  • Over 3 million automobiles were sold by Kia worldwide in 2018, and the company is one of the fastest-growing brands in numerous international markets. Although it is a sister brand of Hyundai, the two firms’ front-end operations remain distinct, and they engage in direct competition with one another over similar items in the same market.
  • Hyundai products and the complete Kia product line share platforms and components. On any car, however, there is no cross-badging or evident part sharing. The Soul, Optima, and Sorento are three of its most well-liked products. We’ll probably get the Rio, Picanto, Sportage, as well as some new compact cars made just for India.

The Indian Kia logo changed, but why?

Kia emphasizes that the name change represents their effort to provide a wide range of sustainable transportation solutions.

With Seltos, Kia Motors India makes its debut in the nation in 2019. The organization will now go by the name Kia India.

As part of its new global brand identity, Kia Motors India formally changed its corporate name to Kia India on Monday. After approval by the Ministry of Corporate Affairs, the modification results in the deletion of the word “Motors,” and the company will now operate under the corporate identity of Kia India Private Limited.

The Korean automaker said the name change is now official in a press release. According to the firm, Kia India is shifting away from its conventional manufacturing-driven structure and toward a more purpose-driven business in accordance with its brand re-launch. “Kia’s ambitious intentions to lead the future mobility revolution in India with premium goods equipped with unique design and segment-first features, digitized services, and supplemented by one of the largest networks” are symbolized by the new brand purpose, “Movement that inspires.”