Hyundai Rotem, Korail at odds over price of high-speed train

By Lee Hyo-sik

Hyundai Rotem and Korail are at odds over the price of the former’s newly-developed high-speed train, according to the companies, Tuesday.

Korail, the state-run railroad operator, has refused to purchase the HEMU-250 bullet train from the rolling stock manufacturing arm of Hyundai Motor Group at prices offered by the latter.

Korail said Rotem has to supply the train at a lower cost than its bidding price.

However, Rotem said that Korail is making unreasonable demands, arguing that it cannot sell the trains at below production costs.

Korail recently held a bid for 30 high-speed train cars, which will run on the Busan-Masan line scheduled to open in 2020. The company said the price for each train car cannot exceed 4.4 billion won.

Only Rotem took part in the bid and offered the HEMU-250 at below 4 billion won per car, more than 10 percent lower than Korail’s asking price of 4.4 billion won.

But Korail has asked Rotem to further slash the price. After the train car marker refused to do so, Korail declared the bid void.

“We decided to hold the bid again after we failed to narrow differences with Rotem over the price of its high-speed train,” a Korail official said. “We will try to hold the new bid as soon as possible to select the train car provider for the Busan-Masan line.”

Rotem also confirmed the collapse of the bid, saying that it will take part in Korail’s next bid.

“It was unfortunate that Korail did not accept our offer. It was the best offer we could make,” a Hyundai Rotem official said. “We will also likely be the only bidder next time. With Korail buying only 30 train cars, no foreign markers would be interested. Next time, we will try to reach a consensus with Korail.”

Korail plans to operate Rotem’s HEMU-250, Korea’s first high-speed train using a dispersed power pack arrangement. Bullet trains, which currently run on the nation’s railroads, are the power car type that have engines in the front and rear cars.

In contrast, the HEMU-250 with a top speed of 250 kilometers per hour is suitable for quick acceleration as each car has own engine.

The bullet train developed in 2012 is ideal for Korea’s railways, which have a relatively short distance between stations, Rotem said.

Japan and most other countries that operate high-speed trains using a dispersed power pack arrangement. Those seeking to run bullet trains also prefer this type.

This is why Rotem has been unable to export its bullet trains over the years.

With no track record of running the dispersed power type trains, the company has failed to win orders in the United States, Thailand, India, Hong Kong and other countries over the past few years.

“We need a record to show we successfully ran dispersed power-type bullet trains to win overseas orders,” the Rotem official said. “We need to have HEMU-250 on the Busan-Masan line as soon as possible to push ahead with our overseas ventures.”

In April, Turkey plans to holds a bid to select companies to supply bullet trains and build railways extending 820 kilometers from its capital Ankara to provincial cities. The project is worth 32 trillion won.

Malaysia is also set to organize a bid late this year for its 324-kilometer-long high-speed railway project, valued at 14.3 trillion won.