South Korea’s largest carmaker Hyundai Motor Company has entered into a memorandum of understanding (MoU) with the Indonesian government to build a manufacturing plant near Jakarta, one of the world’s most densely populated cities.
Hyundai Motor said it will invest about USD1.55 billion in the Indonesian auto manufacturing plant from now until 2030, including product development and operation costs.
Indonesia, the largest automobile market in the ASEAN region, recorded 1.15 million units in annual sales last year and is considered a potential high-growth automotive market, aided by a stable economic growth of 5% per year. Key ASEAN countries including Indonesia, Thailand, Malaysia, Vietnam and Singapore are expected to create an automotive market of approximately 4.49 million units in 2026, growing from 3.16 million units in 2017.
The state-of-the-art manufacturing plant will be located on an 8.35 million-square-foot site (77.6-hectare) in the city of Deltamas, an integrated industrial, commercial and residential district in the eastern outskirts of Jakarta.
Production will start in late 2021, with an annual capacity of 150,000 vehicles and a plan to grow that to 250,000 vehicles a year. Hyundai plans to make small sport utility vehicles (SUVs) and multi-purpose vehicles (MPVs), while electric vehicles (EVs) tailored to Southeast Asian market are under consideration.
The company is also currently exploring the production of ASEAN-specific electric vehicles (EV) in its Indonesian plant. Indonesia has not only made a public policy of building Indonesia into an electric vehicle manufacturing nation, but this is also built on the Southeast Asian country’s significant nickel and cobalt resources.
Hyundai said it is committed to helping nurture Indonesia’s EV ecosystem, and together with its sister company Kia Motors Corporation, aims to make Hyundai Motor Group the world’s third-biggest EV manufacturer in the world by 2025.
The official MOU signing ceremony was held on 26 November at the Hyundai Motor plant in Ulsan, South Korea, the world’s single biggest integrated vehicle plant. Officials in attendance included: President Joko Widodo of Indonesia; Luhut Binsar Pandjaitan, coordinating minister for Maritime Affairs and Investment of Indonesia; Airlangga Hartarto, coordinating minister for Economic Affairs of Indonesia; Bahlil Lahadalia, chairman of Indonesian Investment Coordinating Board (BKPM); Euisun Chung, executive vice chairman of Hyundai Motor Group and Wonhee Lee, president and CEO of Hyundai Motor Company.
“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 Chung.
The automaker intends on taking an approach of “innovative differentiation” which will include built-to-order manufacturing. This flexible and customer-orientated approach should gain a competitive edge over predominantly Japanese competitors.
Hyundai Motor currently operates manufacturing plants in eight countries including the United States, China and India. In 2018 Hyundai Motor and affiliate automaker Kia Motors achieved combined sales of more than 7.4 million vehicles globally, making Hyundai Motor Group the fifth largest automotive group in the world. The addition of the Indonesian plant further extends Hyundai’s global production network, optimizing supply to better respond to customer demand across all continents.