SEOUL - Hyundai Motor Co. said last week it will invest $300 million in a joint venture to build up to 300,000 passenger cars a year in China, apparently ending its long quest to crack the huge market.
It is unclear, however, whether Hyundai has Chinese government approval to build cars there. Citing overcapacity concerns, the Beijing government in 1997 indefinitely froze approvals for new auto-assembly projects.
In its announcement, Hyundai said it will team up with Jiangsu Yueda Group, which has a dormant joint venture with Kia Motors, now a wholly-owned Hyundai subsidiary. The Kia venture, set up in 1996 to assemble the Pride subcompact, has been crippled by the Chinese central government's refusal to clear Pride knockdown kits through customs.
Under the agreement, Hyundai will own 20 percent of the venture, Yangchen Yueda-Kia Motors Co., augmenting Kia's 30 percent holding. Hyundai said it will increase its share to 51 percent as soon as Chinese law permits foreign majority control.
The company will be renamed Jiangsu Hyundai-Kia Yueda Motor Co. Ltd. Hyundai said the partners will build a 150,000-unit plant in Yangchen, Jiangsu province, about 200 miles north of Shanghai. It is scheduled to be completed in 2002. Hyundai said it expects to double capacity later, but it did not say when.
The company did not say which model will be produced at the plant.
Hyundai-Kia Chairman Chung Mong-Koo said the China investment represented a major step toward Hyundai's goal of producing 4 million vehicles per year by 2010, nearly double last year's output.
Hyundai already had a small, direct foothold in China in Dongfeng-Hyundai, a commercial-vehicle joint venture founded in 1993. Hyundai invested $6 million and provided technology to build nine-seat and 11-seat buses based on the Grace van. Fewer than 1,000 were built in 1998.