Kia wants to invest in ASEAN growth

Yes, there are many fans of all things Korean in this part of the world be it food, K-pop, or K-drama. But when it comes to cars, the K is lagging behind the J in Southeast Asia. The big reason for that is the lack of manufacturing facilities in the region for the Korean brands. Many of them still export from South Korea to most of the world, including to us.

That is about to change, as Kia has unveiled major plans to establish a CKD (completely knocked down) plant in Malaysia with a view to export to the rest of the region. Yes, that includes the Philippines.

Kia Niro, Carnival, Sorento, Sportage image

Kia Motor Corporation (KMC) just released their plans for the ASEAN region, starting with the establishment of Kia Asia Pacific or APAC as their regional think tank and headquarters. And they will be setting up a CKD plant to maximize the ASEAN free trade area (FTA) for zero tariffs. It is very similar to what Kia's parent Hyundai is planning with their own factory in Indonesia.

Interestingly, Kia's partner in this endeavor is Berjaya. If you're unfamiliar with the automotive operations of Berjaya, they are also invested in the Mazda business in the region, including the Philippine distributor.

Kia Niro, Carnival, Sorento, Sportage image

The list of models that Kia intends to produce in Malaysia is very interesting. By 2022, they will start production of the Kia Carnival and Kia Sorento. In 2023, they will start production of the Kia Sportage (yes, the all-new one) and even the Kia Niro hybrid. That means those are the models that they will export, and it could signal the arrival of hybrid and electric vehicles in the ASEAN region.

Kia Niro, Carnival, Sorento, Sportage image

Over 5 years, Kia plans to produce a total of 100,000 vehicles in Malaysia, gradually ramping up production year on year for sale in Malaysia and for export. They plan to export 6000 units in 2022, then 9000 in 2023, then 12000 in 2024, then 15000 in 2025, and 19000 by 2026.

Kia Niro, Carnival, Sorento, Sportage image

The interesting thing is Kia also stated in the plan that the facelifts of the Sorento and Carnival will be in 2024, which is unusual. Normally carmakers do not make it officially known when the facelifts of updates of their models are until maybe about a year prior.

Perhaps the important question here is why Kia selected Malaysia as the location for their CKD plant and not the Philippines. Kia cited that they found the business environment in Malaysia to be suitable for the CKD business. The automaker adds that the policies in place in Malaysia are favorable for their CKD investment, as well as the already established programs for logistics and vendors.

If that was the case, then it is highly likely that the Philippines was not in the running at all.