Hyundai Motor to invest $1.55 bln in first Indonesia car plant

SEOUL, Nov 26 (Reuters) - South Korea's Hyundai Motor
005380.KS said on Tuesday it has signed a preliminary deal to
build a new factory in Indonesia, which would be its first car
plant in Southeast Asia and a crack at Japanese rivals that
dominate the market.
The deal comes as Hyundai and affiliate Kia Motors
000270.KS struggle with a prolonged sales downturn in China,
where they suspended two factories this year.
Hyundai Motor said it will invest about $1.55 billion in the
Indonesia auto manufacturing plant from now until 2030,
including product development and operation costs.
The facility, to be built in the city of Bekasi, east of
Jakarta, will start production in late 2021, with an annual
capacity of 150,000 vehicles and a plan to grow that to 250,000
vehicles a year, Hyundai said.
Hyundai plans to make small sport utility vehicles (SUVs)
and multi-purpose vehicles (MPVs), while electric vehicles (EVs)
tailored to Southeast Asian market are under consideration.
Hyundai said it is building the production facilities to
avoid import tariffs ranging from 5% to 80% in the ASEAN region.
The plant will cater to Indonesia, the region's largest
automobile market, and other countries belonging to the
Association of Southeast Asian Nations (ASEAN), it said.
The plant will allow the automaker to secure future growth
to help it "combat slowing demand in the global automotive
market", Hyundai said in its statement.
The deal was signed at an event attended by Indonesian
President Joko Widodo and Hyundai Motor Executive Vice Chairman
Euisun Chung. Widodo is in South Korea for a meeting of ASEAN
leaders hosted by South Korean President Moon Jae-in.
Moon has been pushing a "New Southern Policy" aiming to
deepen ties with Southeast Asia as Seoul seeks to curb its
reliance on traditional trading partners like China and the
United States.
Hyundai is far behind Japanese rivals in Southeast Asia,
with its sales reaching 122,883 vehicles versus Toyota's 854,032
from January to September this year, according to research firm
LMC Automotive.
LMC Automotive forecast a 4% year-on-year decline in total
vehicle sales in the ASEAN region in the fourth quarter, partly
because the slowdowns in the Thai and Indonesian economies show
no signs of abating.
Hyundai said key ASEAN countries including Indonesia,
Thailand, Malaysia, Vietnam and Singapore are expected to see
combined vehicle sales grow to 4.49 million units in 2026, from
3.16 million in 2017.