South Korea’s Hyundai Motor said on Tuesday it had signed a preliminary agreement to build a new plant in Indonesia, the company’s first auto plant in Southeast Asia and a challenge to its dominant Japanese rival.
Meanwhile, Hyundai Motor and its subsidiary Kia Motors are struggling to cope with a prolonged sales slump in China, where two of its factories have shut down this year.
Hyundai said it would invest about $1.55 billion in indonesian car manufacturing plants between now and 2030, including product development and operating costs.
Hyundai said the plant, which will be built in Bekasi, east of Jakarta, would start production by the end of 2021 and would have an annual capacity of 150,000 vehicles, with plans to gradually increase annual production to 250,000.
Hyundai plans to produce small SUVs and MPVs, and electric cars for the Southeast Asian market are also under consideration.
Hyundai said in a statement that the plant would ensure future growth to help it “respond to a slowdown in global automotive demand.”
Hyundai’s sales in Southeast Asia lag far behind those of its Japanese rivals, with 122,883 units sold between January and September, compared with 854,032 for Toyota, according to LMC Automotive, a research firm.
Major ASEAN countries, including Indonesia, Thailand, Malaysia, Vietnam and Singapore, expect total car sales to grow to 4.49 million vehicles by 2026 from 3.16 million in 2017, Hyundai said.