Even as it is in the process of building a new plant in
Montgomery, Alabama, Hyundai Motor Co. is turning its eyes to Europe for
its next overseas push, driven by an ambition to become the
fifth-largest carmaker in the world by 2010.
"Hyundai Motor has long-term investment plans to set up new
overseas plants in each of the major regions to tailor its products to
the unique requirements of each market," said Senior Executive Vice
President Harry Choi. By having a new plant in Europe and boosting its
capacities in other overseas facilities, Hyundai Motor hopes to increase
overall annual production capacity to 5 million units by 2010, from the
current 1.9 million units.
South Korea's largest carmaker will begin feasibility studies
on the best site for its European plant "soon," with a
decision expected around 2005, Choi said.
He didn't provide a specific timeframe when it will start
building the plant - the company's first in Europe - or how much it
will spend. But company spokesman Park Sang-Woo said it usually takes
two to three years to open a new plant from when the decision is first
made.
The European market accounted for about 28 percent of Hyundai
Motor's exports in 2001, while its largest export market, the U.S.,
took up 47 percent. During the first eleven months of 2002, Hyundai
Motor's sales reached 1.6 million units with 984,069 units sold
overseas. For 2003, Hyundai Motor expects its exports to reach more than
1 million units.
The company currently has 11 overseas production plants, mostly in
Asia and Turkey, which together roll out 166,000 units a year.
"It is time for Hyundai Motor to look overseas, particularly
with its production almost on par with total capacity," said
Samsung Securities senior analyst Kim Hag-Ju. "With a plant in
Europe, Hyundai will be able to enjoy advantages such as lower shipping
costs and easier access to customers who are relatively unfamiliar with
Hyundai Motor," he added.
Furthermore, Kim pointed out Hyundai Motor has been suffering low
profitability in Europe due largely to foreign exchange losses - a
problem that could be resolved with a regional manufacturing base.
The carmaker's presence in Western Europe is still relatively
small, with a 1.67 percent share of the passenger-car market. It expects
sales in Western Europe to total 230,000 units in January-November 2002,
marginally up from 228,000 units for all of 2001. "Sales in Europe
have been steadily growing despite generally sluggish car demand in the
region amid a hazy global economic outlook," said Hyundai
Motor's Park.
"It is largely thanks to brisk demand for a new compact model,
Getz." Sales of Getz, which was released in Western Europe in the
summer, totaled 36, 000 units in 2002 and are targeted to reach 800,000
units in 2003.
ING Barings analyst Suh Sung-moon said a relatively high tariff on
car imports is one of the biggest obstacles to Hyundai Motor and other
foreign car makers increasing their exports to the area. The EU imposes
a 10 percent tariff on imported cars, while the U.S. imposes a 2.5
percent tariff, he said. Aside from its plans for Europe, Hyundai Motor
will first work on increasing production in China, the world's
fastest growing automobile market.
Hyundai Motor recently opened a new plant in Beijing under a joint
venture agreement with Beijing Automotive Industry Holding of China. The
new Chinese plant's annual capacity totals 30,000 units and Hyundai
Motor plans to invest a total of $1.1 billion in the venture to expand
output to 500, 000 units by 2010.
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