We investigate the Cauchy problem and the diffusion asymptotics for a spatially inhomogeneous kinetic model associated to a nonlinear Fokker-Planck operator. Its solution describes the density evolution of interacting particles whose mobility is hampered by their aggregation. When the initial data lies below a Maxwellian, we derive the global well-posedness with instantaneous smoothness. The proof relies on hypoelliptic analogue of the classical parabolic theory, as well as a positivity-spreading result based on the Harnack inequality and barrier function methods. Moreover, the scaled equation leads to the fast diffusion flow under the low field limit. The relative phi-entropy method enables us to see the connection between the overdamped dynamics of the nonlinearly coupled kinetic model and the correlated fast diffusion. The global in time quantitative diffusion asymptotics is then derived by combining entropic hypocoercivity, relative phi-entropy and barrier function methods.