Aggressive Management
Hyundai Motor Co. and its smaller affiliate Kia Motors Corp. will invest 4.7 trillion won (US$4.2 billion) in facilities this year, up more than 5 percent from a year earlier. Out of the 4.7 trillion won (US$4.2 billion) investment, 3.6 trillion won (US$3.22 billion) will inject into the domestic facilities, while 1.1 trillion won (US$983.9 million) will go into facilities overseas. In particular, the figure for domestic investment grew over 20 percent from a year ago. It is believed to be as part of its plan to overcome uncertainties at home and abroad and weak domestic demand with aggressive business management.
According to Hyundai-Kia Motors’ facilities investment plan this year, the group will make a combined investment of 4.79 trillion won (US$4.28 billion) – 3.28 trillion won (US$2.93 billion) for Hyundai Motor and 1.51 trillion won (US$1.35 billion) for Kia Motors, up 5.8 percent from 4.52 trillion won (US$4.04 billion) a year earlier. The figure for Hyundai Motor increased 18.8 percent compared to last year, while the figure for Kia Motors decreased 14.5 percent.
The investments in Kia Motors’ facilities dropped due to the completion of its plant in Mexico. Kia Motors made a 662.5 billion won (US$592.58 million) investment in the Mexican plant last year alone, but the figure decreased nearly 500 billion won (US$447.23 million) to 167.6 billion won (US$149.91 million) this year. Since the company has already made most of its initial large-scale investments in facilities at the Mexican plant, which has started operation last year, it will focus on repairing facilities rather than expansion from this year.
The total investments in domestic facilities, including the expansion of production lines, will be 3.63 trillion won (US$3.25 billion) – 2.54 trillion won (US$2.27 billion) for Hyundai Motor and 1.09 trillion won (US$973.35 million) for Kia Motors. The figure increased more than 600 billion won (US$536.67 million) from 2.97 trillion won (US$2.66 billion) last year.
Also, Hyundai Motor and Kia Motors will invest 735.8 billion won (US$658.14 million) and 420.5 billion won (US$376.12 million), respectively, in their overseas facilities. Since most of their production bases overseas have already surpassed 100 percent of operating rates, it is inevitable for them to expand their facilities.
The operating rate of Hyundai Motor Manufacturing Alabama (HMMA), the company’s production base in North America, reached 102.4 percent last year, producing 379,020 cars which exceeded its annual production capacity of 370,000 units. The rate of factory operation, which shows an actual output compared to a production capacity, of the Chennai manufacturing facility at Hyundai Motor India (HMI) stood at 102.3 percent, Hyundai Assan Otomotive Sanayi (HAOS) in Turkey at 115 percent, Motor Manufacturing Czech (HMMC) at 108.6 percent and Hyundai Motor Manufacturing Rus (HMMR) at 103.5 percent. The facilities investments in the HMMC, which is the main base for the European markets, showed a whopping 158.3 percent increase from 61.9 billion won (US$55.37 million) last year to 159.9 billion won (US$143.02 million) this year.
Among Hyundai Motor’s production bases, only two plants in Korea and Brazil had less than 100 percent of operating rates – Korean plant with 95.4 percent and Brazilian plant with 89.9 percent.
The situation is similar in Kia Motors. The average operating rate of Kai Motors’ global production facilities is overloaded with 100.5 percent – the Soha-ri, Hwaseong and Gwangju plants at 98.5 percent, U.S. plant in Georgia at 106.2 percent, Slovakian plant at 102.9 percent and Mexican plant at 105.1 percent.