Kia Restructures Global Production, Focusing on India and Mexico

Kia is reshaping its global production strategy, focusing on India and Mexico as key growth hubs while transitioning its U.S. and European operations to produce hybrid and electric vehicles. The importance of local production is increasing, and a faster reorganization of overseas plants is expected.

According to industry sources, Kia produced and sold a total of 1,039,187 vehicles at its overseas plants from January to August this year, a 3.7% increase from 1,001,682 units during the same period last year.

India and Mexico were the primary drivers of this growth. In particular, India saw production rise from 200,205 units to 241,124 units, marking a significant increase of 19.9%. The increase from India alone (39,916 units) exceeded the total net increase across all overseas plants (37,505 units). Mexico also contributed to growth, expanding from 188,640 units to 205,100 units, an 8.7% increase.

In contrast, existing major production hubs showed a downward trend. The Slovakia plant in Europe saw production drop from 211,157 units to 195,000 units, a decline of about 7.7%, making it the plant with the largest sales decrease among Kia's five overseas production sites.

The situation in the U.S. and China was similar. U.S. production remained virtually unchanged, decreasing slightly from 236,750 units to 236,400 units, a 0.1% drop, while China saw a 1.5% decline from 164,930 units to 162,566 units. This indicates that the growth in sales from India and Mexico offset declines in other plants, contributing to Kia's overall sales increase.

The changes in overseas production sites are attributed to a restructuring of the global supply chain. Kia is redistributing production roles by responding to the need for localization due to rising protectionism and the pace of electrification. The company has opted to increase production in high-growth markets like India and Mexico while shifting its U.S. and European operations to focus on hybrid and electric vehicle production in response to growing demand.

Kia aims to establish a sales system of 1.48 million units in emerging markets by 2030, which would account for approximately 36% of its global sales target of 4.13 million units that year, indicating that four out of ten vehicles will be produced and sold in emerging markets.

Notably, India, the world's third-largest automotive market, is being developed into a core growth hub beyond just a small car production base. Sales of the Seltos from the Indian plant surged by about 80% compared to the previous year through August. Future additions to the Indian production lineup, including the Sirocco EV and Carens EV, are expected to transform it into a comprehensive production base encompassing both internal combustion and electrified vehicles.

Meanwhile, the U.S. and Europe are adapting to the rapid pace of electrification. The Georgia plant in the U.S. has enhanced its hybrid capabilities with the new Telluride and the first locally produced HEV, the Telluride HEV. The Slovakia plant in Europe is expanding local production of EV2 and EV4 models, transitioning into a center for electric vehicle production.

An industry insider noted, "With increasing variables such as tariffs, subsidies, and trade wars, localization is becoming crucial. The ability to respond quickly to regional demand is becoming a competitive advantage."