NEW DELHI :
Kia Motors Corp., one of the newest entrants in India’s automobile market, will focus more on volumes and market share, and establish the brand instead of chasing profits. The subsidiary of South Korea’s Hyundai Motor Group will also study the government’s plans to build infrastructure and other aspects of electrified mobility before it decides to introduce electrified vehicles in India.
Kookhyun Shim, managing director and chief executive, Kia Motors India, said in an interview that the company will initially aim to establish the brand in this market instead of focussing only on profits. Kia has so far invested $1.1 billion in India and it will not be able to turn profitable in the near future, Shim said.
“Kia’s philosophy is more about being a sustainable brand in India for the long term. We have learnt a lot of lessons from other competitor brands. So, we want to be the most loved in the first stage," he added.
Kia’s strategy may help the company attain a foothold in the intensely competitive Indian car market, which is billed to become the world’s third largest by 2025.
On Thursday, the company unveiled its first product for India that will go on sale in the next few months. The Seltos sport-utility vehicle (SUV) is targeted at the robust Indian SUV market, which has players such as Hyundai, Tata Motors Ltd, and Mahindra and Mahindra Ltd. The segment will witness more competition with the upcoming entry of China’s SAIC Motor Corp. and Groupe PSA of France.
Despite the competition, Kia has set an aggressive target of becoming the fifth-largest automaker in India in the next five years. To achieve its goal, the company will introduce four new models over the next two years.
Kia along with SAIC Motor-owned MG Motor and PSA are the three new auto makers set to enter the domestic market this year and the next. Of the three, Kia has outlined so far the most aggressive strategy for India as it will start its journey with a capacity of 300,000 vehicles a year and 265 touch points—a mix of dealerships and service centres—across 160 cities.
SAIC, through its brand Morris Garages or MG, is looking to create a niche by introducing an affordable electric vehicle in the first year of starting operations in India.
Kia, though, is unlikely to follow that path, and would wait for concrete steps from the Union government before introducing any of their electrified—hybrid, plug-in hybrid and electric—vehicles.
“Apart from the announcement related to the subsidies, we have to look at the investment in building related infrastructure and policy on the goods and services taxes and import duties. We see the market from the point of price as well as volumes. That’s why we cannot say anything at the moment," Shim said.
The top two car makers—Maruti Suzuki India Ltd and Hyundai—have announced plans to offer electric vehicles in India in 2019 and 2020.
Kia has also invested in making its plant in Andhra Pradesh ready for electric vehicle assembly.
Besides an aggressive approach with products and covering almost 80% of the domestic market from the start of operations, Kia will impart importance to long-term sustainability and profitability of dealer partners and parts suppliers. “We are ready with 265 touch points in 160 cities that means the dealers have also invested a lot in Kia Motors. We will work closely with our dealers and will care for their profitability. We have experience in managing dealers in many countries and will do our best to maintain the profitability of not only dealers but also our vendors," Shim said.