Kia Motors begins construction on second car-manufacturing plant in China

(SEOUL) October 31, 2005 -- Kia Motors Corporation and its Chinese joint venture partner, Dongfeng Yueda Kia, today announced the start of construction on the company’s second manufacturing plant in China, in Yancheng, Jiangsu Province.

Construction on the new plant is scheduled to be completed by the end of 2007. The new facility will have an annual production capacity of some 300,000 vehicles.

At a ground breaking ceremony for the plant, Hyundai-Kia Automotive Group Chairman Mong-Koo Chung said, "With the additional 300,000 units to be added to our annual Chinese production capacity, Kia Motors is now ready to emerge as a major player in China. The new Kia plant will roll out high quality, high value strategic models specifically designed for the needs of Chinese customers."

Secretary of Jiangsu Provincial Party Committee Li Yuanchao, said, "Kia Motors’ active investment in the region in recent years is a strong sign of its commitment, not only to Yancheng City and Jiangsu Province, but also to the long-term development and prosperity of the Chinese automotive industry. The Chinese government will spare no effort to support the construction of the new plant."

The highly-automated facility will be located 3.5 km from the first plant, which is also located in Yancheng. The first plant, which was the subject of a major capital investment by Kia in 1998, is managed by Dongfeng Yueda Kia.

Dongfeng Yueda Kia plans to invest a total of US$800 million into the project by issuing new shares and borrowing from local lenders. The Chinese government has promised a range of incentives including tax breaks, provision of land at favorable prices and building of infrastructure such as roads and railroads.

The new plant will add 2,800 new jobs to the current workforce of 1,900 Dongfeng Yueda Kia employees in the region, which will result in total direct and indirect employment creation -- including jobs at Kia contractors/suppliers -- of 15,000 jobs.

Kia will encourage its Korean suppliers to expand their local facilities into China to ensure stable parts supply and ongoing price competitiveness. Kia Motors plans to use China and Slovakia -- in the form of its European plant, which is on track for completion by the end of 2006 -- as its two pivotal, global manufacturing bases.

Dongfeng Yueda Kia was established as a joint venture between Dongfeng and Yueda of China and Kia Motors in 2002. Last year, it sold 62,506 vehicles in the Chinese market, including the D-segment Optima, Carnival MPV and Tianlima compact sedan.

Donfeng Yueda Kia expects to increase sales to 130,000 units this year. The completion of the new plant will lift Kia’s total annual output capacity in China to 430,000 units. In 2008, the Hyundai-Kia Automotive Group’s total production capacity in China will reach 1.03 million units.

Photo caption: Hyundai-Kia Automotive Group Chairman Mong-Koo Chung (fourth from left) and Secretary of Jiangsu Provincial Party Committee Li Yuanchao (fifth from left) celebrate the groundbreaking of Kia’s second plant in China.

Kia Motors Corporation (www.kiamotors.com) – one of the fastest growing automakers in the world -- was founded in 1944 and is Korea’s oldest manufacturer of motor vehicles. As part of the Hyundai-Kia Automotive Group, Kia aims to become one of the world’s premier automotive brands. Kia’s 16 manufacturing and assembly operations in 12 countries produce more than 1.1 million vehicles a year that are sold and serviced through a network of distributors and dealers covering 155 countries. Kia today has over 32,000 employees and annual revenues of $14 billion. It is the major sponsor of the Australian Tennis Open and an official worldwide sponsor of the Davis Cup. Kia Motors Corporation’s brand slogan -- "The Power to Surprise" -- represents the company’s global commitment to surpassing customer expectations through continuous automotive innovation.

Al Majid Motors Co. (www.kia-uae.com), member of Juma Al Majid Group is the sole distributor for Kia vehicles in the UAE. AMMC currently sells Kia vehicles in UAE through a network of 6 showrooms, 2 dealers with 2 more new showrooms expected to be added soon and has a market share of 4.7%. To attend the ever growing KIA customers in UAE, AMMC has a total fleet of 12 service centres and 15 parts centres. Al Majid Motors Co is celebrating its 16th year of operation in UAE.