Kia to ramp up production in Andhra Pradesh factory as semiconductor crisis eases, demand grows

The company expects to increase output by a third to 300,000 units in this financial year on the back of the newly launched multi-purpose vehicle Kia Carens, which has been priced aggressively between Rs 8.99-16.99 lakh (ex-showroom, India).

“To meet the increase in demand we will start a third shift at our plant in March. Last year, we produced 225,000 vehicles, for domestic as well as exports markets. This year we will go past the 300,000 mark”, Hardeep Singh Brar, head (sales & marketing) at Kia India, said on the sidelines of the launch.

The Carens will take on the likes of Maruti Suzuki Ertiga (Rs 8.12-10.85 lakh), Maruti Suzuki XL6 (Rs 10.14-12.02 lakh) and the erstwhile multi-purpose vehicle (MPV) segment leader, Toyota Innova (Rs 17.30-25.32 lakh).

Kia said the vehicle is styled as a sport utility vehicle (SUV) and offers the space of a MPV. About 25,000 MPVs are sold every month in the local market. The segment has been growing at a fast clip, especially since the outbreak of the pandemic, with Indians preferring to travel with families and also for weekends trips, said industry experts.

The company has received 19,089 bookings for the vehicle in the past one month. As much as 50% of the demand has come in for the diesel variants, indicating consumer preference for the fuel at the premium end of the market.

With this Kia India will fully exhaust the initial capacity of 300,000 units it has commissioned at its manufacturing facility in Andhra Pradesh. Studies are on to gauge the investment required to add production capacity of 100,000 units at the existing site.

Brar said availability of semiconductors has improved of late. However, supplies are expected to stabilise in the second quarter of 2022. “We were selling 15,000-16,000 units on average the past few months. In January, we could do 19,319 units. We are definitely seeing better supplies. I would not say everything is sorted for now. But we see further easing April onwards,” he said.

Meanwhile, demand in the local market remains strong, especially for utility vehicles, said Brar. “Last year, SUVs and MPVs put together contributed 45-46% to overall sales. Demand in these segments continues to be strong and we expect it (the share of UVs) to be closer to 50% this year,” he said.

While sales of SUVs rose 62% to 1,147,227 units last year, those of MPVs increased 32% to 248,470 units during the period.