With plans to grow by 10 percent in 2023, Kia Motors plans to expand annual capacity to 4.2 to 4.5 lakh units in the next two or three years. Autocar Professional speaks with Tae Jin Park, Managing Director of Kia India about the South Korean automotive brand's India plans.
06 Feb 2023 | 11069 Views | By Hormazd Sorabjee & Ketan Thakkar
With SUVs at the core of Kia’s model range in India, the South Korean car maker has taken advantage of the SUV boom and has outperformed the market with stellar growth ever since it entered India in 2018. And now, with the market moving towards cleaner alternatives, Kia too is ...
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With SUVs at the core of Kia’s model range in India, the South Korean car maker has taken advantage of the SUV boom and has outperformed the market with stellar growth ever since it entered India in 2018. And now, with the market moving towards cleaner alternatives, Kia too is exploring a range of alternate powertrain options for its future model line-up Tae Jin Park, Managing Director of Kia India spoke to Autocar Professional on a wide range of subjects including a fresh investment of Rs 2,000 crore to locally manufacture two EVs by 2025 whilst also exploring possibility of bringing CNG and Hybrid vehicles.
We’ve just begun 2023 so how do you see the year ahead?
The year 2023 may see some difficulties in the form of global recession, geo-political complexities like the one between the USA and China. Plus, there are still some supply chain challenges and there will be new regulations in India. The regulations of RDE, CAFE II and the safety issues are all coming together. So, all these kinds of things bring challenges, but we think the Indian automotive industry is in a relatively bright spot compared to other countries. Even though last year India’s economy slowed down, it is higher than any other country. The Indian automotive industry in 2023, despite difficulties, we expect the growth to continue, but it will be in single digits.
What is Kia's growth plan for 2023? Do you expect to outperform the market, and do you need to expand capacity soon?
Though there are lots of challenges, we are targeting around minimum 10 percent growth this year. Our production capacity, in the last 2-3 years, has continuously increased. When we started, it was scheduled to be 300,000 units per year but at the end of last year we had already increased it to 370,000. So, we’re continuing to increase our production capacity. In the next 1-2 years, we’ll reach a minimum of 420,000-450,000 production capacity.
When you enter local production for EVs would you need another new plant?
Our plant in Anantapur is very flexible, from the day one we could produce electric vehicles alongside ICE vehicles. We will continue to rely on production optimisation to get more capacity of the existing factory. If we need more capacity, we have some extra land at Anantapur, so that’s no problem to secure additional capacity from the existing set up.
Where does India stand in global rankings for Kia?
It was number five in 2021, it has broken into the top 3 markets in 2022. We continue to get constant support from our headquarters, and we benefit from it.
What is your electrification plan for India and your plans to target the mass market with locally built EVs. Will the EV6 too be locally produced?
Yes, definitely, in the year 2025 two EV models will be locally manufactured here. Coming to your question of locally assembling the EV6, I can say that we have very seriously analysed the pros and cons between a CKD and a CBU. From a cost point of view there is not a big difference. But after considering some suppliers' issues regarding quality, we decided that CBU was the best route for product quality. That is why we can provide the best quality of the vehicles to our customers and hence have a good image as an EV brand to our customers. That is why we decided to bring the EV6 as CBU and not CKD.
But could there be CKD going forward?
So far we are not considering CKD because just two years later mass production EVs are coming and we are very busy preparing for them.
You announced a Rs 2,000 crore investment for EV manufacturing in India. How is that money going to be invested?
Most of that investment is for R&D because as you know, even though we have a lot of preparation on EV models, we must modify it here to meet some special regulations. Some part of the investment will go in changing and upgrading the production line. At our current plant, our production line is very flexible, so we can produce ICE and EV at the same time. All those current investments are on the way. So, most of the Rs 2,000 crore is in accordance with the PLI scheme and we are on the way.
Tata Motors has grabbed the EV market with a quick conversion of ICE to EVs, do you think this is a good strategy?
Conversion from ICE to EV is a global trend. It makes sense. Definitely, we have to do it. In India, Tata Motors is very aggressive on its EV plans. But everybody has a different strategy, and we have our own strategy. We are not behind on the EV trend in the Indian market, we are one step ahead on EVs, not volumes but what value we are offering consumers. We are constantly thinking, what is the right value we can offer customers, we are taking time, using time to understand the real usage of EVs for the customers to find the right value proposition.
The Carens MPV has done well, and you've unveiled the new Carnival (KA4) at the Auto Expo. Are MPVs a key focus area for Kia too?
I want to clarify the definition of MPV because the old definition is people mover or something like that. But these days, the new trend is there is no difference between the SUV and MPV, all the features get together in big cars. So MPVs look more like SUVs now. That is why we call it an RV. Until now, in India the RV market did not exist and the customer had no choice or any MPV alternatives. That is why we are targeting this segment by offering products which have the look of an SUV with functionality of an MPV.
Customers will accept RVs. It will grow together with SUVs, maybe not as fast as SUV but there is still a very big and growing market for RVs. We want to be the leading RV company in India. That is why we are not seriously considering small cars. And then we will continue focusing on the RV segment. The premium SUV or RVs, definitely we are considering now. There are many options for us, there is Sportage and Sorrento, all different kinds of SUVs are available for us, we may bring some of them here.
A lot of global vehicle makers are diverting chips that were meant for Russia. Can Kia give India some extra allocation?
Yes, that is maybe something we can get some benefit from because the India market is strongs and enjoys good support from our headquarters. That is why in the last two years, even though there is a supply issue, our headquarters has given India priority. For Kia, the Indian market is the third biggest in the world after The US and then South Korea.
What about hybrids, CNG and flex-fuels? What are the alternatives to the ICE?
Of course, the EVs are definitely one of the first priorities but there are other options too including flex fuel vehicles, hybrids and even diesel. There are some challenges on diesel, as the cost is likely to go up with the new RDE regulations, however I still expect that there will be some demand for diesel, because of its performance characteristics. However, if there is no demand for diesel, we will then stop it. It is also time for us to test new alternatives like flex-fuel, hybrids and CNG. There is more acceptability for CNG now.
This interview was first published in Autocar Professional's February 1, 2023 issue.