Hyundai, Kia May Sell off Plants in China
Hyundai Motor Co. and Kia Motors Corp. are expected to invest more than 10 trillion won (US$8.81 billion) in facilities and research and development (R&D) this year. The two companies have decided to inject a total of 5.70 trillion won (US$5.02 billion) into expanding and maintaining production equipment at global production bases and upgrading old facilities this year. As they are expected to sharply increase their R&D investment from last year’s 4.40 trillion won (US$3.88 billion) to accelerate the development of future cars, they are likely to open the era of 10 trillion won (US$8.81 billion) of investment.
Hyundai Motor and Kia Motors have budgeted 3.57 trillion won (US$3.15 billion) and 2.14 trillion won (US$1.89 billion), respectively, for investment in production facilities at home and abroad this year, according to their business reports released on April 3. The combined figure represents a 2.8 percent increase from 5.56 trillion won (US$4.90 billion) last year. The amount of domestic investment comes to 3.35 trillion won (US$2.96 billion), accounting for 59 percent of the total facilities investment budget.
For the domestic market, Hyundai Motor is planning to spend 2.32 trillion won (US$2.04 billion) on expansion of facilities for the release of new models and complementary investment. For overseas production bases, the company has budgeted 586.60 billion won (US$517.06 million) for the Alabama plant in the United States, 325 billion won (US$286.47 million) for the Chennai plant in India, 105.10 billion won (US$92.64 million) for the Nosovice plant in the Czech Republic, 75.10 billion won (US$66.20 million) for the Izmit joint venture plant in Turkey, 139.20 billion won (US$122.70 million) for the Piracicaba plant in Brazil and 23.10 billion won (US$20.36 million) for the Saint Petersburg plant in Russia. Compared to last year, investments in the United States, Turkey and Brazil increased.
Kia Motors will inject 1.04 trillion won (US$912.56 million) into its plant in South Korea, 678.90 billion won (US$598.41 million) into the Anantapur plant in India, and 208.50 billion won (US$183.78 million) into the Georgina plant in the United States, 178.40 billion won (US$157.25 million) into the Zilina plant in Slovakia and 39.80 billion won (US$35.08 million) into the Pesqueria plant in Mexico. The company began construction of the Anantapur plant in India with an annual production capacity of 300,000 units in October last year. The plant will start operation in the second half of this year as Kia Motors’ outpost to make inroads into the Indian market in earnest.
China has been excluded from Hyundai and Kia Motors’ facilities investment plans this year. Accordingly, it is still unclear that Hyundai Motor and Kia Motors will restart the Beijing Plant 1 and the Yancheng Plant 1, respectively, within this year and they are more likely to sell them.
The two companies made a record high R&D investment of 4.42 trillion won (US$3.90 billion) in total last year. Hyundai Motor spent 2.76 trillion won (US$2.43 billion) in R&D investment, while Kia Motors invested 1.66 trillion won (US$1.47 billion). Some inside and outside of Hyundai and Kia Motors say that the amount of investment will grow further this year. Hyundai Motor is expanding R&D investments in hydrogen-powered electric cars and future connected cars as well complete autonomous vehicles with an aim of commercialization by 2030. Kia Motors also focused on securing future car technologies last year, such as memory chips of multichannel CAN communications, navigation-based smart cruise control-curve. Considering the facts, the two companies are expected to invest 4.50 trillion won (US$3.97 billion) to 5 trillion won (US$4.41 billion) in R&D this year. When combined with facilities investments, the amount of total investments exceeds at least 10 trillion won (US$8.81 billion), the first time in the history of the two carmakers. The two firms invested a total of 9.98 trillion won (US$8.80 billion) last year, including 5.56 trillion won (US$4.90 billion) in facilities and 4.42 trillion won (US$3.90 billion) in R&D.