Asia Minute: South Korean Automaker’s Southeast Asian Push

Nov 29, 2019

One of South Korea's largest companies is shifting its strategy when it comes to certain markets in the Asia Pacific. It's cutting back its presence in China, and making a big bet in Southeast Asia.

South Korea's Hyundai Motor signed a deal this week to spend more than 1.5 billion dollars on an auto plant in Indonesia. It's the biggest investment the company has ever made in Southeast Asia, and it comes as it sales continue to decline in China.

Earlier this year, Hyundia stopped production at one of its five plants in China — following a sales drop of more than 28% from 2016 through last year.

The new factory will be built in West Java, about 25 miles outside Jakarta — and plans are to start operations by the end of 2021. Hyundai plans to eventually produce a quarter of a million vehicles a year there — not only for the local market, but also for regional expoert to countries including the Philippines, Thailand and Vietnam.

Indonesia has been trying to establish itself as an auto production hub for Southeast Asia — a role traditionally played by Thailand.

The government in Jakarta especially wants to encourage electric vehicles and other clean technology — and the Hyundai factory deal comes as Japanese automakers increase their own investments in Indonesia.

Last week, the Indonesian media outlet Kompas quoted the country's Industry Minister as saying Toyota plans to spend about 2 billion dollars to expand its production there. While the Jakarta Post reports that Honda plans a more modest local expansion.