Hyundai Motor has struck an agreement with the Indonesian government to produce cars with auto parts supplied by local partners. This is the first time the Korean automaker will produce cars overseas without using Hyundai Mobis, the sparts Manufacturing arm of Hyundai Motor Group. Hyundai Motor will break ground for a car factory in Indonesia within this year.
Hyundai Motor first started producing cars overseas in 2000. The company typically set up operations for Hyundai Motor and Hyundai Mobis together. By sourcing parts from local Indonesian partners, Hyundai could leverage the local automotive industry Infrastructure and reduce costs. Currently the Indonesian market is dominated by Japanese car makers who have already set up Infrastructure. This could mean high risk level for large-scale investment from Hyundai.
The plans were initially announced in November 2019, when Hyundai Motor announced that it will invest around USD 1.55 billion in the Indonesia auto Manufacturing plant until 2030, for expenses including product development and operation costs.
The facility will be built in the city of Bekasi, east of Jakarta, and it aims to start production in late 2021, with an annual capacity of 150,000 vehicles and a plan to grow that to 250,000 vehicles a year. Hyundai plans to make small sport utility vehicles (SUVs) and multi-purpose vehicles (MPVs). Electric vehicles (EVs) tailored to Southeast Asian market are under consideration.
(Source: Business Korea)