21.6.2006

New KIA Rio to Be Assembled in Russia

"SOK" Group and Kia Motors agreed on expansion of Kia model line to be assembled at "Izh-Avto" production facilities

SOK Group, a subsidiary OJSC IzhAvto, and Kia Motors Corporation has extended its cooperative relationship by signing an agreement for the assembly of an additional model - the new third generation Kia Rio – at Izh-Avto's production facilities. Mass production is scheduled to commence in the second half of 2006. In accordance with the agreement signed earlier by Izh-Avto and the Russian government based on Decree #166 "On Industrial Assembly," the Izhevsk plant will first start DKD (disassembled knock down) assembly of the Kia Rio with further transition to CKD (complete knock down) production by 2008 including welding and painting of both sedan and hatchback models.

From 2000 to 2005, the Kia Rio was one of the most popular Kia models in the Russian market, recording sales records in five consecutive years and reaching nearly 20,000 units (19,642). The third generation Kia Rio has been created by Korean engineers especially for European market. Impressive head lamps give the car a touch of individuality and make it more visible in the traffic stream. Its specially designed new generation engine delivers the most power in its class, yet boasts low fuel consumption and high environmental friendliness. Larger dimensions enable the third generation Kia Rio to claim "best-in-class" interior space. In late 2005, a jury of influential Eastern European motoring journalists voted the Kia Rio winner of the prestigious "Autobest 2006" award for being "the new car most suitable for the needs of the population of the region, thoroughly modern with new technology and affordable to buy." In 2006, the Kia Rio ranked highest for initial quality in the sub-compact category according to J.D. Power and Associates' 2006 Initial Quality Study. In Russia, the new model has been distributed through Kia Motors' dealer network since September 2005. Over 4,000 customers have already made their choice in favor of the new generation Kia Rio.

Previously, "Izh-Avto" launched industrial assembly of Kia Spectra at its renovated production facilities. This C-class budget car has already acquired a good reputation on Russian roads and gained popularity among Russian car lovers. In the first half of 2006, the Kia Spectra has become Kia's bestseller in Russia, accounting for one-third of all Kia sales in the Russian market. The launch of new Kia Rio production is one more step in the strengthening of the strategic partnership between Kia Motors and SOK Group, which envisages gradual expansion of Kia model line assembly at Izh-Avto's production facilities.

"Integration of Russian enterprises into the world automotive industry is a part of our company's strategy. Within the framework of this strategy, Izhevsk automobile plant is gradually reorienting its activities based on the production of modern cars, such as the new models of Kia Motors Corporation," said Vice-President of SOK Group Andrew Frolov. "The Kia Rio assembly agreement proves that both parties are satisfied with the results of the Kia Spectra project and are ready to further develop their strategic partnership. I'd also like to stress that growth of assembly volume at Izh-Avto will stimulate further localization of component production."

"We are ready for the production of new models," said General Director of Izh-Avto Mikhail Dobyndo. "The present Izhevsk plant has radically renovated technology for Kia Spectra production, and has taken great steps forward for over a quarter of a century. Highly qualified and experienced personnel at the plant have managed to introduce 6 new models in the last 5 years. In late 2006, due to the transfer to a two-shift work schedule in line with expansion of Kia Spectra production, the plant will hire 1,000 new workers. And the launch of Kia Rio production will allow us to create additional jobs."

SOKIA General Director Sergey Shabanov stressed that "nice design, a wide range of options and competitive price will allow the Kia Rio assembled at Izhevsk to achieve a strong position in the Russian market and rival the popularity of its predecessor."

"Kia Motors Corporation is the most dynamic automaker in the world. In 2005, Kia Motors' worldwide sales grew by 12% while in Russia sales rose by 30%. In the first half of this year, sales in Russia have jumped by 180%. The Russian automobile market will become one of the major priorities for Kia Motors in the near future. That is why we made our choice to extend our cooperation with SOK Group, which has proven itself to be one of strong and trustworthy partners in Russia," said Jung-Moon Park, Senior Executive Vice President and COO of Kia Motors Corporation.

Kia Motors Corporation (www.kiamotors.com or www.kia.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 12 manufacturing and assembly operations in 7 countries employ over 23 thousand people. Its network of distributors and dealers covers 160 countries. In 2005 Kia sold 1.27 million vehicles, annual revenues amounted to $16.5 billion, and net profit exceeded $700 million.

"SOK" Group (www.sok.ru) – Russian holding company with major sphere of interests in automotive industry. "SOK" Group has consolidated actives of three automobile plants – "Izh-Avto", "RosLada" and "VAZinter Service" and is the second largest producer of local automobiles in Russia. The company takes leading position on Russian market of automobile components.

SOKIA (www.sokia.ru) – affiliate to "SOK" group. Since March 2005 the company has been official distributor of KIA Motors, which supplies full range of KIA models to Russian market. Within one year SOKIA has established effective dealers network which includes 98 showrooms certified in accordance with KIA Motors corporate standards. At present the company covers 70% of all KIA car sales on Russian market.