General Motors, Ford, Hyundai, Volkswagen, BMW, Mercedes and now KIA – International auto players seem to be marching into India at the snap of one’s fingers. And no this is not just Asian players alone. If you go back to my list, it includes American and German auto companies as well. As incomes rise, aspirations rise, as aspirations rise, the demand for luxury rises and as the demand for luxury rises, companies providing such luxury rises.
More on Kia Motors?
Kia is South Korea’s second largest automobile manufacturer. The 66 year old manufacturer is partly owned by Hyundai. It has a wide portfolio of products including passenger cars, commercial vehicles, SUVs, concept cars and electric vehicles.
Kia has already moved to create a new identity for itself after a stake was acquired in it by Hyundai during the Asian Flu of 1997. This has resulted in the development of their Tiger Face brand identity.
Kia Motor’s India Interest?
The time to accept that India is the world’s next big thing in the automobile industry is NOW! Players of all sizes and geographies with products ranging from Rs 2 lacs to crores are flocking to the country like never before. And obviously for Kia this kind of chance was hard to let go off.
Its popular hatchbacks like Picanto and Proceed, sedans like Rio and Cerato and SUVs like Soul and Sorento could turn out to be some interesting products for the Indian market.
The fact that they plan to set up a manufacturing plant in Chennai is really good news because it would bring down their costs considerably especially of their hatchbacks. And as all of us have already discussed in many of the posts before, India is turning out to be the small car manufacturing hub of the country. The sedans as well as compact SUVs could also turn out to be pretty good if marketed well as the disposable incomes are increasing and more and more people are buying such cars.
A great advantage for Kia would be Hyundai’s strong presence in India. This would enable it to use Hyundai’s logistics, back end operations, procuring materials and components at lower costs etc. But none of this would be done at the front end in terms of marketing, selling or even manufacturing as this was regarded as contrary to their strategies in other countries.
What can Kia do?
In India instead of wasting their hard earned money on setting up an entirely new plant, Kia could work on the brownfield plant of Daewoo which had facilities for manufacturing engines and transmissions.
More than saving costs, this would give them the necessary technology and set up to manufacture their cars.
Moving into India could well turn out to be a gold mine of an opportunity for KIA!