Group to see production  capacity grow by 26%  in next few weeks


Hyundai Motor Group is speeding up its mid-term project to overtake General Motors in vehicle sales in China by expanding its manufacturing capacity.

Though Volkswagen maintains the No. 1 position in the Chinese market, the sales gap between GM and Hyundai Motor-Kia Motors has narrowed.

Last year, GM ranked second with vehicle sales of 1.32 million units and Hyundai-Kia ranked third with 1.17 million units. Volkswagen saw its 2011 sales reach 2.2 million units.

Currently, the Chinese factories of Hyundai and Kia have a combined production capacity of 1.13 million units ― 700,000 units at two Hyundai factories and 430,000 units at two Kia factories.

The affiliated automakers are about to see their capacity grow by 26.5 percent, or 300,000 units, to 1.43 million units as Hyundai is set to complete the construction of its third Chinese plant in Beijing in the coming weeks.

Further, late this month or early next month Kia will hold a groundbreaking ceremony to build its third factory with a capacity of 300,000 units in Yancheng by 2014.

Under the project, six factories of the two companies will have the capacity to roll out 1.73 million units per annum within two years, up 53 percent from the current 1.13 million units.

Group chairman Chung Mong-koo is expected to deliver a speech while participating in the two events for Hyundai and Kia, respectively, according to Hyundai Motor spokespeople.

Hyundai Motor has continued to increase its share since it established the Beijing Hyundai corporation and factories a decade ago.

At least 50 percent of the taxis running Beijing streets were produced at Beijing Hyundai factories.

“While the Avante sedan, dubbed the Elantra in China, accounts for most of the Hyundai taxis, more and more motorists have been buying upper segment cars including the Sonata,” a company executive said.

Beijing Hyundai has six models: the Sonata, Avante (Elantra), Tucson, Sonata NFC, Accent and Elantra Yuedong.

According to statistics, the cumulative sales of Beijing Hyundai have increased to more 1.5 million, sales income over 150 billion yuan (230 million) and total tax to 16.5 billion yuan since Beijing Hyundai was established. Some 100,000 jobs were also created through the brand.

Beijing Hyundai also lays claim to revitalizing Beijing’s manufacturing industry, contributing to the capital’s economy and promoting social harmony.

Hyundai and Kia have been successful in expanding their market share in China, taking nearly 10 percent of the market. GM has about 12 percent market share.

Volkswagen has the top position in China with market share of about 18 percent.

Hyundai plans to begin producing a small vehicle designed for the China market at the new plant during the second half of 2012, and other models designed for the market will be added to the plant in the future.

Kia’s third plant will be located in the Yancheng Economic Development Zone in Jiangsu Province, which plays home to the carmaker’s existing China-based plants.

The company posted rapid sales growth in China over the past few years.

A group spokesman said he believes the new vehicle releases and their localized marketing strategies will continue to boost sales, allowing the companies to closely vie with GM for the No. 2 position this year.

“China is becoming the most important market that could decide the very fate of Hyundai Motor and Kia Motors,” he said.

By Kim Yon-se (kys@heraldcorp.com)