Hyundai Motor reports 21 percent drop in 1Q profit

Apr 28, 2017, 01:02

The world's fifth-biggest automaker together with affiliate Kia Motors 000270.KS reported on Wednesday a first-quarter net profit of 1.33 trillion won (£921.82 million), its 13th straight year-on-year quarterly fall.

The Seoul-based Kia Motors Corporation today signed a Memorandum of Understanding (MoU) with Andhra Pradesh government for setting up a auto manufacturing plant in Anantapuramu district.

Kia will produce strategic compact sedan and compact SUVs, especially for the Indian market at the new plant. China's retaliatory move against Korea following the latter's decision to deploy the US antimissile Terminal High Altitude Area Defense (THAAD) system in the country also weighed on sales of the Korean automaker in the world's largest vehicle market.

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After a series of speculations regarding its plans to enter the Indian vehicle market, Kia Motors has now officially announced its India entry. The new factory will increase the portion of Kia's overseas production to almost 60 percent from 55 percent.

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Kia will invest United States dollars 2 billion on this plant which will have a capacity to manufacture 3 lakh cars per annum. The recent recall of its Theta 2 engine equipped cars at home and in the US was largely to blame for the plunge in its operating income as the company had to set aside about 100 billion won provisions to cover it. Although Kia was once one of the most popular brands in China - with its K3 model the 12th best-selling auto there - its sales began falling in March, the company said. Going by this statistic, India is poised to become the third largest vehicle market in the world by the end of 2020.

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"Through the construction of a factory in India, Kia Motors will pioneer India's auto market, which is under the spotlight as the next growth market".

"This is an exciting and mutually-beneficial project and a next major step in Kia's global expansion plans", Park said on the occasion.

"Kia will be a strong new force in the Indian automobile market".

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