SEOUL -- To further expand its rapidly growing presence in China, Hyundai Motor Co. plans to establish a joint venture to make and sell as many as 200,000 commercial vehicles there annually.
Hyundai also said it has advanced its target year for selling 1 million vehicles annually in China to 2008, triple its expected sales this year. Previously, 1 million was the goal for 2010.
In the commercial-vehicle project, Hyundai signed a memorandum of understanding on Tuesday, June 21, with Guangzhou Automobile Industry Group of Guangzhou to jointly invest $430 million to build a plant at Huadu, near Hong Kong.
The plant would have an initial capacity of 20,000 units a year, but plans call for expanding the capacity to 200,000 units a year by 2011.
With the expansion, the total investment is estimated at $1.24 billion.
"This commercial-vehicle joint venture is critical to reach our goal of producing 1 million vehicles in China by 2008 and making Hyundai the best-selling nameplate in China," said Hyundai Chairman Chung Mong Koo.
Buses and trucks
The plant will manufacture buses and light-, medium- and heavy-duty trucks for China. The factory will include a commercial-vehicle engine plant, a proving ground and an r&d center, Hyundai said.
Construction is slated to begin by year end, for completion of the first phase by 2007.
Hyundai and Guangzhou Motor will each hold a 50 percent interest in the joint-venture company, Guangzhou Hyundai Motor Co.
Huadu is a port on the Pearl River delta, close to Hong Kong. It is a commercial hub of Guangdong Province.
The largest opportunity for the plant will be in making light- and medium-duty trucks for China, a market which is 100 times larger than Korea for those vehicles, Hyundai said.
Zhang Fang You, chairman of Guangzhou Automobile Industry Group, said the two companies aim to make Guangzhou Hyundai Motor Co. the leading commercial vehicle maker in China.
Rapid start for Hyundai
Hyundai entered China in a dramatic way in 2002, rapidly opening a plant with Beijing Automotive Industry Corp. to make Sonata and Elantra sedans. Meanwhile, its Kia Motors Corp. subsidiary began producing Accent and Optima sedans and Carnival minivans with Dongfeng Motor Industry Investment Co.
The two Korean joint ventures, which are expanding their plants, expect combined sales of 330,000 units this year, up from 206,500 units in 2004. From January through May 2005, their combined sales totaled more than 123,000 units.
Guangzhou Automobile Industry Group, which makes Honda cars in a joint venture with Honda Motor Co., is one of the largest carmakers in China.
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