South Korean car maker “KIA motors” has decided to re-enter into the Pakistani market. According to resources, KIA motors local partner – Lucky Cement is ready to invest Rs12 billion ($115 million) to set up a plant and manufacture the Kia vehicles.
Lucky Cement, which is a part of business conglomerate by Yunus Brothers Group has allocated a proposed equity investment of up to Rs 12 billion, divided into 1,200 million shares (Rs 10 per share). The company has finalized its all paperwork, a notice of LUCK at PSX said here on Thursday.
Kia did not make it clear if they themselves would invest in the venture. Representatives for the South Korean company could not immediately be reached for comment.
The South Korean’s car giant entry into the market isn’t new. They used to assemble cars in Pakistan in the past but disappointing sales led to a halt in manufacturing.
However, the new venture will deal with manufacturing, assembling, marketing, distribution, sale, after-sales service, import and export of all types of KIA cars in Pakistan.
“The new venture will also market and sell besides import and export of ‘all types of Kia vehicles, parts and accessories,”
Lucky Cement told the Pakistan Stock Exchange (PSX) in a statement.
Kia’s re-entry into the market will strongly affect the car market in Pakista, and will give tough competition to the market dominants: Toyota, Honda and Suzuki, who have been assembling cars in Pakistan with their local partners.
Some big names like Audi and BMW are already operating in Pakistan, and now, last month, French carmaker Renault also agreed to invest in a new factory in Pakistan.
The authorities believes extended competition shsould bring down the fancy car prices in the state. In March, the government also introduced a new auto policy favouring new entrants into the market by offering generous import duties. The incentives have caused an uproar in the current market participants, some of whom believes they should get similar terms.