Beijing Hyundai launches US$1.2b plant

PUBLISHED : Wednesday, 09 April, 2008, 12:00am
UPDATED : Wednesday, 09 April, 2008, 12:00am


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Beijing Hyundai opened a US$1.2 billion manufacturing plant yesterday, the first of several new plants being considered by overseas carmakers in the increasingly competitive mainland market.

This is the second plant in China for Beijing Hyundai, the joint venture between Beijing Automotive Industry Holding and Korea's Hyundai Motor.

Built on the outskirts of Beijing, the plant is expected to annually produce 200,000 redesigned Elantras, a family sedan. It will reach a capacity of 300,000 vehicles and 500,000 engines after a further expansion scheduled to be completed in 2010.

The company aims to double the total production capacity at its two plants to 600,000 units by 2010.

Hyundai is the first carmaker to complete expansion efforts in the fast-growing vehicle market before the Beijing Car Show starts next week.

Many carmakers are gearing up to fight for their share of the Chinese market through expansion.

A spokesman for Volkswagen China, Kai Grueber, said the company's co-operation with its partner SAIC Motor Corp in the Nanjing manufacturing plant, which was acquired by SAIC from Nanjing Automotive Group last year, is part of its expansion plans.

Japan's Toyota - partner of the mainland's second-largest carmaker First Auto Work Group - is planning to build a manufacturing plant in northeastern Jilin to produce a new model.

The mainland sold 700,500 passenger cars in March, up 24 per cent from a year earlier.

The country is expected to have total vehicle sales of 10 million units this year, up 13.6 per cent from last year. However, car prices on the mainland are expected to fall by an average of 5 per cent this year due to an oversupply.

Beijing Hyundai's new Elantra will be priced between 99,800 yuan (HK$111,198) and 129,800 yuan.

'This is not a high price,' said Matthew Kong, vehicle analyst of Fitch Ratings in Beijing. 'Beijing Hyundai is certainly employing price tactics to enhance its competitiveness.'

Last year, Beijing Hyundai actually lowered its sales target to 260,000 units from the previous goal of 310,000 units as a cost-savings move.

'Beijing Hyundai cut target sales last year though Elantra recorded robust sales when the model just landed in China,' said Mr Kong. 'Most probably this was due to its cost-control programme, as many of the parts are purchased in South Korea,' where they are more expensive.