Kia Motors signs a deal to invest $1.1 to construct factory in India

South Korean automaker Kia Motors signed a deal on Thursday to invest $1.1 billion to construct its first factory in India, aiming to tap a growing market at a time when its China sales are sluggish.

The Hyundai Motor affiliate published a 19 percent downturn in first-quarter net profit as conflict with dealerships hit its China sales, resulting its shares drop 2.2 percent in a flat market.

Production at the factory located in Anantapur district, Andhra Pradesh state, would start in the 2nd half of 2019, the business said.

Kia is anticipated to take advantage of Hyundai’s supply chain network built around its factories in the nearby state of Tamil Nadu to acquire a foothold in the Indian market, hoped to become the world’s third-largest by 2020. Hyundai is India’s No. 2 car manufacturer by sales.

The plant, which will have production capacity of 300,000 automobiles a year, will produce a compact sedan and a sport utility vehicle tailored for the Indian industry, Kia stated.

It will begin in the fourth quarter of this year.

“Our brand-new India plant will allow us to offer vehicles vehicles in world’s fifth-largest market, while offering greater versatility for our worldwide company,” Kia Motors President Park Han-woo stated.