Kia Plans India Push With Small Cars After China, U.S. Sales Dip

Kia Motors Corp. will take a plunge into India’s crowded small car market.

The affiliate of South Korea’s Hyundai Motor Corp. plans to make three or more models in the compact hatchback and sport-utility vehicle segments within three years of starting production in 2019, Manohar Bhat, head, marketing and sales at Kia’s local unit said in an interview. Hatchbacks account for almost two-thirds of India’s car market, which is poised to become the world’s third largest by 2020.

Crowded Market

Maruti dominates the Indian automobile market that has 18 companies

Source: Society of Indian Automobile Manufacturers

Data for 10 months to January

About a dozen companies already make small hatchbacks in India where profit margins are relatively low, a key factor that led General Motors Co. to announce an exit from the market last year. Success in India is essential for Kia after losing ground in China due to political tensions and in the U.S. where consumers are increasingly lapping up big SUVs.

“We view India as the next untapped market with a huge potential,” Bhat said.

While Kia is set to begin production by the middle of next year at Anantapur in southern India, more competition is coming. Chinese carmaker SAIC Motor Corp. is also setting up its first car manufacturing plant in India to sell the MG brand from 2019. France’s PSA Group is also planning to produce and sell in India.

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