Hyundai Motor to build car assembly plant in Indonesia in 2021

28, Nov. 2019

(Photo courtesy of Hyundai Motor Corp.)
(Photo courtesy of Hyundai Motor Corp.)

SEUOL, NNA – Hyundai Motor Co. will build an automobile assembly plant in Indonesia following the two countries’ signing earlier this week of a comprehensive economic partnership agreement that is likely to take effect early next year.

South Korea’s global carmaker will break ground for the plant in December for scheduled operation in the second half of 2021, planning to invest $1.55 billion, it said Tuesday.

The automaker signed for the project with Indonesian President Joko Widodo at a Hyundai plant in the southeastern city of Ulsan, South Korea on Tuesday.

The total capital expenditure will include product development and operational costs by 2030, it said.

The automaker, which manufactures vehicles in major global markets like China, India and the United States, has decided to penetrate Southeast Asia’s largest automobile market and compete head-to-head with Japanese rivals such as Toyota Motor Corp. and its wholly owned subsidiary Daihatsu Motor Co., which hold a combined market share of some 95 percent.

The plant, which will be built on a 77.6 hectare site in Kota Deltamas, an integrated industrial park city east of Jakarta, will have an annual output capacity of 150,000 units and produce compact SUV and multipurpose vehicles as well as sedan models designed for the Southeast Asian market, it said in a statement.

The South Korean firm plans to expand the capacity to up to some 250,000 units in the future, while considering making “ASEAN-specific electric vehicles” at the plant. It also aims to establish a network of 100 dealerships in Indonesia by 2021, according to the statement.

South Korea and Indonesia signed the trade pact on Monday after seven years of negotiations on the sidelines of a special summit in the southern port city of Busan. Indonesia became the first Southeast Asian country to seal such an agreement with South Korea, Aju Business Daily reported.

Under the comprehensive trade deal, major industrial items like steel products used for automotive steel plates, automotive parts and synthetic resins will benefit from zero tariffs, according to the report.

Hyundai operates manufacturing plants in eight countries, producing over 7.4 million vehicles globally in 2018, together with its group arm Kia Motor Corp., the statement said.

Hyundai has suffered a sharp drop in new vehicle sales in China, its major market with annual sales of over 1 million, since South Korea deployed the U.S.-funded anti-missile defense system THAAD in 2017, prompting boycott campaigns against South Korean brands among Chinese consumers.