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Korean Carmakers Secure Production Beachhead in Asia

Strategic Insights

— 2 min read

Korean carmakers Hyundai Motor and Kia Motors are rapidly expanding their production facilities in Asia, aiming to become one of the world's top-five automakers by increasing their joint production capacity to 4 million vehicles in 10 years. This massive expansion is driven by the continent's large growth market, with industry watchers predicting that only five automakers will survive internationally, while the remaining field will be relegated to spare parts suppliers. As the countries of Asia continue to grow in population, with Indonesia having around 210 million residents, Hyundai-Kia is looking to secure a strong presence in the region.

Key Takeaways:

  • Hyundai Motor and Kia Motors plan to increase their joint production capacity to 4 million vehicles in 10 years, aiming to become one of the world's top-five automakers.
  • The two carmakers have laid the groundwork for a large production facility in China and plan to resume the suspended joint "national car" project with Indonesia in April at the earliest.
  • Hyundai-Kia aims to treble the capacity of their production facilities in Jiangsu, China, from 50,000 units per year to 150,000 units per year by 2002, and eventually increase it to 300,000 units per year.
  • The Indonesian market, which plummeted to 110,000 units in 1998 due to the economic crisis, is projected to recover to the pre-crisis level of 390,000 units per year by 2003.
  • Kia announced its plan to resume the joint venture with Indonesia following a state visit by Indonesian President Abdurrahman Wahid, paving the way for other Korean businesses to advance into the country.
  • Hyundai, Kia, and Daewoo are increasing their presence in China, with Hyundai and Daewoo working on production facilities that can produce up to 300,000 units per year.
  • Volkswagen, on the other hand, is the first foreign carmaker to make its way into China and maintains production facilities capable of producing 300,000 units per year.

Statistics:

  • Hyundai-Kia aims to produce 4 million vehicles in 10 years, with the market predicted to increase to 5 automakers surviving internationally.
  • Indonesia has a population of around 210 million, making it a crucial market for Hyundai-Kia and foreign competitors.
  • Hyundai-Kia has reached an agreement to set up production facilities in Jiangsu, China, that can produce 50,000 units per year, treble the capacity by 2002, and eventually increase it to 300,000 units per year.
  • The Indonesian market decreased from 390,000 units in 1997 to 110,000 units in 1998 due to the economic crisis.
  • The market is projected to recover to the pre-crisis level of 390,000 units per year by 2003.
  • Volkswagen maintains production facilities in China capable of producing 300,000 units per year.

Sources:

  • "Hyundai, Kia To Resume 'National Car' Project in Indonesia", Reuters, 1999.
  • "Korean Carmakers Eye China as Growth Market", The Korea Herald, 1999.
  • "Daewoo Motor Expands China Operations", The Korea Times, 1999.

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