Kia Motors has plans to commence production operations from mid-2019 – an ambitious plan that is shaping up well, especially with the construction of its upcoming plant in the Anantapur district of Andhra Pradesh. The plant has a production capacity of 3 lakh units.
At the same time, though, Kia Motors India is also getting itself ready for the required logistical and ancillary support needed to start operating in the country. To this end, the carmaker conducted its first supplier development event in New Delhi on May 29, 2018. Over 150 automotive vendors from the northern belt were invited. These vendors have been shortlisted by Kia as prospective component suppliers for all of its local production.
Kia Motors India roped-in Crescendo Worldwide – a Germany-based consulting firm – to be responsible for scouting for suppliers based on their past credentials and capabilities, approaching them and then shifting the ones most suitable for future business with Kia Motors India. The firm specialises in the automotive domain and assists companies with global expansions.
While around 25 Tier-1 Korean vendors have already been finalised to supply proprietary parts, the agenda of the meet in New Delhi was to finalise Tier-2 vendors to supply child parts for the bigger assemblies. For a smooth start-off, the manufacturer intends for around 45-50 percent of the total vendor count to comprise of Korean suppliers. These companies will set up their bases in a vendor park being developed around Kia Motors’ 536-acre campus in Andhra Pradesh.
The company targets close to an initial 80 percent localisation of its components in India and also aims to leverage economies of scale. Kia is eventually looking to make India its hub for global procurement and a prime source of parts for its international subsidiaries. Metal casting and fabrication of parts are on the top of the list for localisation; while drivetrain, electronics (including infotainment) and critical engine components will be imported directly from Korea, at least for now.
The company has deployed Lee Sanghwa as its chief procurement officer in India. Sanghwa has a 26-year experience within Kia Motors; his mission is to help expand Kia’s global manufacturing footprint to India with the new plant and to localise components with the help of Indian Tier-1 and Tier-2 automotive component suppliers.
Kia commissioned its first integrated automotive assembly plant in Korea in 1973. Over the past decade, the company has been on an expansion spree. It has opened new plants in China (2002), Czechoslovakia (2006), the US (2009), Mexico (2016) and India (due 2019). With Mexican operations recently underway, Kia is looking for a strategy to source components for Mexico from India.
While the New Delhi event kick-started its supplier development activities, the company will be holding a similar event in Pune soon – within the next 15 days – inviting more participants, and particularly a larger number of Tier-1 players based out of the western automotive hub. Similar events will later reach Bangalore and Chennai, as well.
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