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Kia breaks ground on third China plant

29.06.2012

300,000-unit annual capacity plant to bring Kia’s total manufacturing capacity in China to 730,000 cars per year

- Facility to build China-specific models upon completion in first half of 2014

Kia Motors Corp. and its Chinese subsidiary, Dongfeng Yueda Kia Motor Co., Ltd., held the groundbreaking ceremony for its third plant in the Yancheng Economic Development Zone (Jiangsu Province) today, officially signaling the start of construction of the automaker’s newest state-of-the art manufacturing facility. The plant, which will boast an annual capacity of 300,000 vehicles when completed in the first half of 2014, is an aggressive move by Kia to further strengthen its presence in China, which has become the world’s largest automotive market. Combined with the current annual capacity from its two existing plants in the Yancheng Economic Development Zone, which have annual capacities of 130,000 and 300,000 units, Kia will be able to produce a total of 730,000 vehicles locally in China.
 
Approximately 1,000 guests attended the ceremony, including the Chairman of Hyundai Motor Group, Mong-Koo Chung; Secretary of Jiangsu Province, Luo Zhijun; and Secretary of Yancheng, Zhao Peng. During his welcome speech, Mr. Chung said, “Today is a special day, marking Kia’s next step toward becoming a leader in the Chinese auto industry. This third plant in China will be an opportunity for us to make further progress on the quality front as well as increase overall customer satisfaction. I believe that Dongfeng Yueda Kia will become the one of the most trusted brands in the Chinese automotive industry.”
 
The new plant will be located in the Yancheng Economic Development Zone only 5 km away from Kia’s second plant, enabling utilization of various existing infrastructure facilities and thereby maximizing synergies among all three plants. In addition to state-of-the-art press, body, painting, assembly and engine module processes, the plant will house a technology research center and 1,960-meter high-speed test track. Furthermore, the flexible layout of the third plant will give the automaker the freedom to expand annual capacity by 100,000 units to 400,000 units, as a continued increase in market demand is expected. Upon completion of the plant in the first half of 2014, Kia plans to produce China-specific models that reflect local market preferences.

 
Furthermore, Kia plans to support business expansion and market entry of its affiliate companies as a way of helping enhance their global competitiveness and making a larger contribution to the local economy through job creation and new investment. Secretary of Jiangsu Province, Luo Zhijun, said, “When Dongfeng Yueda Kia started its business in China, many doubted it would find success. However, it has quickly become a representative automotive company in Jiangsu Province, and I expect that the establishment of its third plant will enable Kia to make even more rapid progress in becoming truly admired by Chinese customers.”

Dongfeng Yueda Kia has recorded significant growth in the Chinese market, tallying sales of  432,518 units in 2011 for a 326% increase versus 2007 (101,427 units). So far in 2012 (through May), thanks to the popularity of locally produced models like K2 (China-specific version of the B-segment Rio), C-segment Forte (known as Cerato in some markets) and Sportage CUV, sales reached 185,543 units for 16.7% year-on-year growth, which exceeds average industry demand in China of 6.0% for the same period. Meanwhile, Dongfeng Yueda Kia’s market share has grown from 1.9% in 2007 (18th in the industry)  to 3.6% last year (8th in the industry). And so far this year, its market share has remained at 3.6% while its industry rank has gained a spot to 7th place in China.