Delays in future model launches may impact Kia’s plant capacity utilization targets in India, says GlobalData

Following the news that Kia Motors expects delay in new model launches in India due to COVID-19 pandemic;

Animesh Kumar, Director of Automotive Consulting at GlobalData, a leading research and consulting company, offers his view:

“Launching a vehicle every six months is one of the key strategies of the South Korean automaker. Last year, the company successfully launched Seltos, which competes with the likes of Hyundai Creta, MG Hector, Tata Harrier and Mahindra XUV500, in the above 4-meter compact-SUV segment. Kia Carnival – a premium MPV- was launched during the India Auto Expo in February 2020 and it is generating good numbers in its segment. Kia Sonet – a sub-4 meter compact SUV – is expected to be launched in September and it would be the company’s second vehicle launch during the pandemic. Sonet would compete with Tata Nexon, Mahindra XUV300, Maruti Suzuki Brezza, Ford EcoSport and Hyundai Venue, with whom it shares the platform.

“So far, Kia has done well to not allow the COVID-19 pandemic and the resultant supply chain disruptions to impact the new model launches. In the wake of the pandemic, it is not surprising that the launch of several new and facelift models has been delayed this year in India. While Kia may have hinted towards possible delays, the company is optimistic about the mid and long-term potential as well as plans.

“Kia has a plant in the Anantapur district in the southern state of Andhra Pradesh with an installed capacity of three lakh units per annum on a three shift basis. The company was operating two shifts prior to the lockdowns. The production was halted during the lockdown and in May, the plant resumed operations in a single shift. The resumption of normal operations and normalcy in supply chain are extremely important. Additionally, regular vehicle launches are critical as it would take four or five models from the company’s portfolio to achieve the target of exhausting the installed production capacity by March 2022.”

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