Foothold in Southeast Asian Market

Hyundai Motor is planning to increase the annual output of its assembly plant in Vietnam to at least 100,000 vehicles.

Hyundai Motor Co. is planning to increase its presence in the Southeast Asian market by boosting the annual output of its assembly plant in Vietnam to at least 100,000 vehicles. This is to make a breakthrough in Southeast Asia with its sales in China showing little recovery. At present, Japanese automakers like Toyota and Honda are dominating the Southeast Asian car market.

Hyundai’s sales in China and the United States are on the decline. From January to October this year, the company sold 554,726 cars in the United States, down 1.7% from a year ago. In China, the company’s sales are plunging especially in the second half.

As a result, Hyundai posted a negative earnings surprise in the third quarter. “The company’s operating profit remains below one trillion won unlike in the past and this is a structural problem,” said an industry insider, adding, “Besides, the company is facing various challenges such as a potential 20% to 25% tariff from the United States.”

The success of Hyundai’s plan to better penetrate the Southeast Asian market is not guaranteed at all given the predominance of the Japanese carmakers. Still, Hyundai cannot ignore the region given that its annual economic growth rate amounts to more than 5% and its car demands are skyrocketing. According to the POSCO Research Institute, a total of 4.8 million cars are expected to be sold in the 10 member countries of the ASEAN in 2020, turning the region into the sixth-largest car market in the world. In addition, the ASEAN Economic Community (AEC) was launched this year, eliminating trade barriers among the 10 countries.


Those in the South Korean automotive industry are paying attention to the symbolic significance of the annual output of 100,000 vehicles. Press lines are required for a car assembly plant to be turned into a finished car plant, and press line introduction requires an annual production volume of at least 100,000 cars. In other words, Hyundai’s plan to increase its output in Vietnam is highly important in that the assembly plant can be turned into a finished car plant at any time based on the plan.
 

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