Upon completion of the plant, which will be able to produce 300,000 units annually, Kia will have increased its production capacity in China from the current 430,000 units at its existing two plants to a total of 730,000 units per year.
The new plant will be located just five kilometers from Kia's second plant in Yancheng's Economic and Technology Development Zone. The close proximity to the existing facility will enable Kia to utilise the established infrastructure and to create synergies between the plants.
Kia plans to begin construction of the new plant at the end of next year and anticipates completion of the facility and the roll-out of production models in the second half of 2014.
Strategic models developed especially for the Chinese market to reflect local needs and preferences will be built at the new plant, but the specific models have yet to be finalised as Kia continues to study the rapidly transforming Chinese automobile market.
Kia has been one of the best performing foreign brands in China in recent years. Sales of locally-manufactured Kia vehicles reached 101,427 units in 2007, and the company posted a 40% year-on-year increase in 2008, selling 142,008 units after the second DYK plant was put into full operation.
Kia continued its strong growth in 2009, recording a 70% year-on-year increase (241,386 units sold). Last year, Kia posted further strong double-digit growth, reaching 333,028 vehicles sold for 38% year-on-year growth. So far this year (through the end of October), sales of locally produced vehicles recorded 341,682 units thanks to the introduction of the highly competitive mid-size K5 sedan (known as 'Optima' in markets outside of Korea and China) and the sub-compact K2 (a localised version of the all-new Rio).
According to a Chinese government policy-making think tank, the State Information Centre, next year's local automotive demand will reach 12.7 million units, which is a 14.2% increase from this year's anticipated total of 11.1 million. Annual demand is expected to increase to 17.9 million units in 2014 and to 19.6 million units in 2015.
According to these forecasts and the huge production capacity increases being made by major competitors, Kia predicted that its market share in China would drop from the current 3.5% to 2.4% in 2014 if it only operated two plants.