Kia Motors to increase production in India to 400,000 units by end of 2022: MD

The Seoul-headquartered company had said in an investors call earlier that backorder in India is increasing despite efforts to maximise production. At the end of March 2022, the order book was 127,000 units, led by the newly launched Carens MPV. It was 82,000 in December 2021.

At an event last week to announce the launch of the new EV6 , Tae-Jin Park, managing director of Kia India, told ET, “I think for the next few years we have already secured sufficient production capacity. The enhancement in capacity will happen at the existing site by the end of this year.”

The company said it will look at enhancing profitability in FY23 on the back of sustained demand.

Kia has already secured over 60,000 bookings for the Carens MPV and plans to sell around 60,000 units of this in 2022. Besides sustained increase in domestic order, the company is also seeing strong demand in the exports market.

The company plans to enhance capacity at its Anantapur manufacturing facility to 400,000 units with efficiency improvement in order to cater to higher demand.

Park said that while production capacity of semi-conductors has improved, supplies continue to remain constrained because of limited availability of ships.

“The semiconductor situation is a nightmare. We do not know which chip will be or not be available. Logistics is a challenge. We monitor our production plan almost on a daily basis and make adjustments,” he said.

With the hope of improved supplies, the auto major is looking at growing sales in India by nearly a third in 2022.

The company produced over 227,000 vehicles at Anantapur which accounted for 8% of its global production.

With the launch of Carens in the Indian market and targeted third shift commencement, it aims to produce 300,000-350,000 vehicles in CY2022, including exports. This will enhance its India unit’s contribution to 10%.

Of the planned India production for 2022, the company will export about 80,000 units, as per its global presentation.

With a better operational leverage and bigger contribution from higher priced product, Kia is also confident of improving its profitability, amid severe rise in commodity cost.

Kia’s India unit has not only been quickest in terms of volumes growth but also in terms of revenue and profitability.

Kia was amongst the fastest to break into profits in the country and it ended FY21 with a net profit of Rs 1111 crore. Kia’s Indian business has turned profitable in its third year of operations – a feat not yet achieved by most incumbents with higher market share.

In FY21, Kia India’s total turnover grew by 87% to Rs 20,290 crore, despite it being a Covid year. This is equivalent to 10% of the total estimated passenger car industry revenue last year. The firm’s volume sales grew 90% year-on-year to 196,000 units in FY21.