SEOUL (Bloomberg) -- Hyundai Motor Co. will begin construction of its first plant in Brazil as the Korean automaker expands factories in emerging markets to meet rising demand.
Hyundai is investing $600 million in the factory in Piracicaba, Brazil, which will have an annual capacity to build 150,000 vehicles, the company said in a statement today. Production of a small car will start in November 2012, it said.
The Brazilian plant will complete Hyundai’s manufacturing presence in four key emerging markets after it set up plants in China, Russia and India. The factory will help Hyundai compete more aggressively with Volkswagen AG and General Motors Co. in the South American nation and boost its market share, said Kim Byung Kwan, a Seoul-based analyst at Mirae Asset Securities Co.
“We want to enhance our competitiveness against major U.S. and European automakers in Brazil by setting up a production site,” Hyundai said in the statement. The plant will be the company’s “gateway to Central and South American markets.”
Hyundai’s exports to Brazil rose 19 percent to 80,000 vehicles last year, according to the statement. Sales in Latin America gained 27 percent to 230,000. The Seoul-based automaker expects to sell 93,000 vehicles in Brazil this year.
Hyundai joins automakers including GM, Volkswagen and Toyota Motor Corp. in operating factories in Brazil. The South Korean company expects Brazil to become the world’s third- largest auto market by 2015. Mirae’s Kim expects Hyundai’s Brazilian market share to reach 6 percent by 2014.
The completion of the factory will help Hyundai build as many as 4.51 million units worldwide a year by 2012, according to the statement. Production outside South Korea will account for 2.65 million units. Brazil is the seventh country where Hyundai is setting up an overseas production facility.
Hyundai said in September it will complete the construction of its third plant in China with capacity to make 400,000 units a year by 2012. The company has two plants in India with a combined annual capacity to build 600,000 vehicles.
It started operating a factory this year in Russia with a capacity of 150,000 units. The automaker also runs plants in the United States, Turkey and the Czech Republic.
The small hatchback car that Hyundai plans to build in Brazil will be aimed at customers in Central and South American markets, the company said in the statement. More models may be added after 2013 depending on demand.