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Hyundai Motor inks US$1.5bn deal with Indonesian govt to build automotive plant

The Indonesian government has inked a memorandum of understanding (MoU) with Hyundai Motor Company to build its first manufacturing plant in the country. The Indonesian plant will represent an investment of approximately US$1.55 billion until 2030, including product development and operation costs.

According to Hyundai Motor, the new facility will break ground this month and is expected to begin commercial production in the second half of 2021. Located in Kota Deltamas, the plant will eventually be able to build approximately 250,000 vehicles annually when it reaches full capacity. Together with its local partners, Hyundai Motor expects to create more than 23,000 new direct and indirect jobs at the Indonesian plant. The plant is also expected to make an economic contribution of more than US$20 billion to the Indonesian economy over its first decade.

Hyundai Motor said it plans to produce compact SUV, compact MPV, and sedan models specifically designed for customers in the Southeast Asian market at the new Indonesian plant, which will incorporate facilities for stamping, welding, painting and assembly. The decision to invest in Indonesia will support Hyundai Motor’s growth into new ASEAN markets, securing future growth engines to help the business combat slowing demand in the global automotive market.

Additionally, Hyundai Motor is also exploring the production of ASEAN-specific electric vehicles (EV) in its Indonesian plant. Hyundai Motor is committed to helping nurture Indonesia’s EV ecosystem, contributing to its people’s quality of life through its leadership in clean mobility technologies.

In a bid to accelerate the establishment of a platform for stable product development, production and sales in Indonesia and the wider ASEAN market, Hyundai Motor will pursue an “innovative differentiation” strategy to gain a competitive edge over competitors. To develop strategic vehicle models perfectly tailored for the region, Hyundai Motor has established a dedicated organisation and is currently operating a system in which its headquarters and Indonesia operations seamlessly collaborate on all aspects of product development and mass-production processes.

In terms of production and sales, Hyundai will take a strictly customer-centric approach. Vehicles produced at the new facility will be on a build-to-order basis. Aligned with Hyundai Motor’s customer-centric approach, the tailorable production method allows customers to choose product specifications when ordering, while also lowering inventory costs. As commercial production commences, Hyundai Motor also plans to implement a brand new integrated online-offline-mobile retail channel, or omni-channel, with local eCommerce leaders to optimize sales and customer experience in Indonesia.

“The establishment of Hyundai Motor’s manufacturing plant in Indonesia has been made possible thanks to the continuous cooperation and support from the Indonesian government,” said Euisun Chung, executive vice chairman of the group.

Chung added that Hyundai will continue to listen actively and respond to the Indonesian government’s expectations and policies regarding eco-friendly vehicles, while continuously contributing to the ASEAN community.

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