South Korean car maker Kia Motor Company will start assembling cars in Pakistan, according to a local partner that is planning to invest Rs 12 billion ($115 million) to set up a plant and manufacture Kia branded vehicles.
Karachi-listed Lucky Cement, which is part of the vast conglomerate Yunus Brothers Group, said in a statement on Thursday that it planned to set up a new company to start “manufacturing and assembling” Kia vehicles in the country.
Related: Kia Motors in Talks to Set Up Auto Assembly Facility in Pakistan
Kia cars had been assembled by Pakistan in the past in collaboration with Dewan group, but disappointing sales led to a halt in manufacturing. 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 in a statement.
Kia’s re-entry into Pakistan will boost government efforts to shake up the Japanese-dominated car market and loosen the grip of Toyota, Honda and Suzuki, who assemble cars in Pakistan with local partners. Last month, French car maker Renault agreed to invest in a new factory in Pakistan and official say they are talking to several other car makers.
Related: Renault to Assemble Cars in Pakistan By 2018
The government believes increased competition should bring down exceptionally high car prices in Pakistan, and in March it introduced a new auto policy favoring new entrants into the market by offering generous import duties. The incentives have angered existing market players, some of whom have said publicly they should get similar terms.
Pakistan, with a population of nearly 200 million people, is a potentially huge market, but just 180,000 cars were sold in the 2014/2015 fiscal year. That compares with more than 2 million passenger vehicles a year in neighboring India.
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