Nam Hyun-woo has worked as a staff writer at The Korea Times since 2013, mostly covering business and politics. He currently belongs to the Business Desk where he covers topics such as emerging tech, AI, ICT and Korea's chaebol community. Prior to joining the team, he was the paper's correspondent for the presidential office of Korea during the Yoon Suk Yeol and Moon Jae-in administrations.
Hyundai Motor expands presence in ASEAN
Hyundai Motor Group Executive Vice Chairman Chung Euisun, third from left, poses with Indonesian President Joko Widodo, second from left, during an MOU signing ceremony in Ulsan, Tuesday. Following the MOU, Hyundai Motor will invest $1.55 billion to set up a plant in Indonesia. From left are Indonesian Investment Coordinating Board Chairman Bahlil Lahadalia, Widodo, Chung and Hyundai Motor Company President Lee Won-hee. Courtesy of Hyundai Motor
By Nam Hyun-woo
Korea's largest automaker to build plant in Indonesia
By Nam Hyun-woo
Hyundai Motor Group is increasing its presence in the ASEAN market, investing $1.55 billion to set up a plant in Indonesia and have it as a regional manufacturing base, Korea's largest automaker said Tuesday.
The new plant will enable the carmaker to boost its market share in Southeast Asian countries and compete more effectively with Japanese rivals, which have been dominating the region's car market for years.
During a ceremony at a Hyundai Motor plant in Ulsan, the group's Executive Vice Chairman Chung Euisun and Indonesian President Joko Widodo signed an MOU on building a plant capable of assembling 250,000 vehicles a year in Deltamas industrial town in the city of Bekasi.
For the plant, which will occupy 777,000 square meters of land in the town, Hyundai Motor plans to invest $1.55 billion by 2030. Breaking ground next month, the plant will begin commercial operation at the end of 2021 with a capacity of 150,000 vehicles a year and will later increase the output to 250,000.
The group said it plans to produce a new small SUV, small multi-purpose vehicle and an electric vehicle which is specialized for the ASEAN market.
“The plant is an achievement based on the full support and cooperation from the Indonesian government,” Chung said during the ceremony. “Hyundai Motor will fully correspond to the Indonesian government's policy on eco-friendly cars and contribute to the growth of the ASEAN economy.”
The investment is interpreted as the group's bid to secure a growth driver in new markets and overcome the slowdown in the global automotive industry.
ASEAN member nations have car tariffs ranging from 5 percent to 80 percent and other types of non-tariff barriers. Since tax waivers are given to cars having more than 40 percent of their parts localized, the group said the plant is a “must” for adhering to local trade policies, adding it plans to help partnerships between Korean and ASEAN auto parts suppliers.
Vehicles manufactured from the Indonesian plant will be shipped to the Philippines, Thailand, Vietnam and other countries in the region, and the group said it is also tapping into Australian and Middle Eastern markets. The plant will also assemble pre-manufactured Hyundai vehicle modules, called complete knock-downs, to have up to 59,000 a year for exports.
Indonesia stands as the largest automotive market in ASEAN, selling 1.15 million new vehicles last year. Its average 5 percent economic growth and 270 million population are also attractive factors for carmakers.
To bolster local sales, Hyundai Motor said it will set up a dealer network comprised of more than 100 agencies across Indonesia by 2021.
With the new plant, the group said it seeks to create synergy with its Vietnamese joint venture, Hyundai Thanh Cong Manufacturing Vietnam, which currently assembles more than 60,000 vehicles as complete knock-downs with plans to increase the output to 100,000 by 2020.
The joint venture sold 63,210 vehicles from January to October this year, up 23.83 percent from a year earlier, led by the popularity of the Accent. During the same period, Toyota, the largest brand in Vietnam, sold 64,021 vehicles.