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Hyundai to manufacture buses, trucks in China
July 8, 2005
Hyundai Motor on June 21 signed a contract with China's Guangzhou Motors Group Company to set up a joint manufacturing plant in Guangzhou that will manufacture trucks, buses, engines and other automobile parts for sale in China.
The two auto giants agreed on a 50-50 joint venture with an initial investment of $430 million that will rein in production, sales, after-sales service and logistics functions for their products, a Hyundai official said.
"We couldn't ignore the Chinese commercial vehicle market, which has emerged as the world's largest," Hyundai Motor chairman Chung Mong-koo said in a press release. "In close cooperation with the Guangzhou Motors Group, one of the five largest automakers in China, we will produce the best trucks and buses and become one of the most active players in the segment."
The joint venture will break ground for the plant later this year. The factory, which will cover an area of 2 million square meters, will begin production in 2007, and its annual production capacity will be expanded to 50,000 units in 2009 and 200,000 units in 2011, Hyundai Motor said. Until 2011, the partners will invest a combined $1.24 billion for the commercial vehicle project.
Guangzhou Motors Group specializes in manufacturing passenger cars and buses, with its annual production at some 300,000 units. The company has joined forces with Japanese carmakers, such as Honda Motor and Toyota Motor, to produce large-sized buses and passenger cars.
Guangzhou-Hyundai Automobile is Hyundai's second joint venture in China. It set up Beijing Hyundai in 2002 for its entry into the passenger car market.
Hyundai has expanded investment in China as sales of its compact and mid-sized passenger vehicles grew sharply. Last week, Hyundai released the Tucson sport utility vehicle (SUV) in China to preempt the emerging SUV market. It aims to grab about 30 percent of the SUV market in China as of the end of 2008.
As the Chinese economy expanded, the commercial vehicle market grew on the back of surging orders for construction and logistics and transportation facilities. The Chinese government plans to complete large-scale construction projects in Beijing and large tourist attractions before the 2008 Beijing Olympics.
Both foreign and local automakers sold about 2.9 million commercial vehicles in China in 2004. Consumer demands are expected to exceed 3.5 million units by 2010.