SEOUL: South Korea’s Hyundai Motor said on Tuesday it has signed a preliminary deal to build a new factory in Indonesia, which would be its first car plant in Southeast Asia and a crack at Japanese rivals that dominate the market.
The deal comes as Hyundai and affiliate Kia Motors struggle with a prolonged sales downturn in China, where they suspended two factories this year.
Hyundai Motor said it will invest about $1.55 billion in the Indonesia auto manufacturing plant from now until 2030, including product development and operation costs.
The facility, to be built in the city of Bekasi, east of Jakarta, will 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 said.
Hyundai plans to make small sport utility vehicles (SUVs) and multi-purpose vehicles (MPVs), while electric vehicles (EVs) tailored to Southeast Asian market are under consideration.
Hyundai said it is building the production facilities to avoid import tariffs ranging from 5 per cent to 80 per cent in the Asean region. The plant will cater to Indonesia, the region’s largest automobile market, and other countries belonging to the Association of Southeast Asian Nations (Asean), it said. — Reuters