South Korea’s largest automaker Hyundai Motor Co. will build its first assembly plant in the Philippines, accelerating its efforts to win hearts of consumers in Southeast Asia where its Japanese rivals have long maintained a strong foothold.
According to sources from the automotive industry on Friday, Hyundai Motor and its exclusive local dealer Hyundai Asia Resources Inc. (HARI) have submitted an application to the Philippine government to build a knockdown kit assembly plant, where exported auto components from a foreign country are locally assembled as a final vehicle, in Santa Rosa, a city in the province of Laguna, Philippines.
Hyundai Motor and its exclusive distributor HARI plan to first install an assembly line that is capable of assembling in between 5,000 and 6,000 vehicle units annually in a plant managed by Star Motors Manufacturing Corp. owned by HARI. They plan to expand annual production to 40,000 units.
The facility will mainly assemble components to build the Eon, Hyundai’s small vehicle with an engine displacement of 800 cubic centimeters (cc) that has been gaining much popularity among consumers in India and the Philippines.
Hyundai Motor’s aggressive move to tap further into the Philippines comes as the country’s automotive market has been burgeoning in recent years. As of the first quarter of this year ending March, overall auto sales in the Philippines increased 22 percent compared to the same period in the previous year. About 80 percent of the growing market is currently commanded by vehicles made by Japanese automakers including Toyota Motor Corp., Mitsubishi Motors Corp. and Isuzu Motors Ltd. Thanks to brisk sales of Eon and other models Accent, Starex, and Tucson, Hyundai Motor also has been able to manage to up its share in market, but it still lags behind its Japanese rivals.
The new factory in the Philippines is also expected to help Hyundai Motor benefit from the recent launch of the Association of Southeast Asian Nations (ASEAN) Economic Community that will allow vehicles produced in the Philippines to be subject to tariff exemption when they are exported to other ASEAN countries including Thailand and Vietnam.
With reduced taxes, Hyundai Motor hopes the Eon that has become one of the best-sellers in India repeats its success in other ASEAN countries. According to HARI, Hyundai Motor aims to sell 35,000 vehicles in the Philippines this year, up 58 percent from a year ago. It also aims to raise its share in the market to more than 10 percent in 2020.
Hyundai Motor has been putting out efforts to secure local assembly production plants in Southeast Asia, the rapidly growing auto market. In addition to the planned assembly plant in the Philippines, the automaker currently operates assembly lines in Vietnam, Indonesia, and Malaysia, and its second plant in Vietnam is also expected to begin operation in the first quarter of 2018.
(Reported by MB.com, click here)