Hyundai targets increased Beijing demand

South Korea’s Hyundai Motor signed a preliminary agreement on Tuesday with China’s Guangzhou Motor Group to form a joint venture to make commercial vehicles.

Hyundai’s new partner already makes vehicles in China with Honda and Toyota.

The project is worth $1.24 billion and is intended to meet what Hyundai said is an “explosive” demand for commercial vehicles in China, especially in taking account of expected increased demand for the Beijing Olympic games in 2008.

It forecast that by 2010, demand for trucks and buses will reach 3.5 million units per year.

The project, scheduled to begin production in 2007, is expected to have a capacity to produce 200,000 units each year by 2011. Each party to the venture will make an initial investment of $430 million.

Hyundai is already a top seller in China, but it hopes with this project to increase its total vehicle production in china to 1 million units per year.

That would take its Chinese production to one-fifth of its total output.

In the first quarter of 2005, Beijing Hyundai Motor, Hyundai’s passenger car joint venture, was the top seller of passenger vehicles in China, with 56,100 units sold in the quarter.

Discuss this in the Finance Markets forums

Story link: Hyundai targets increased Beijing demand