|FOUNTAIN VALLEY, Calif. - Hyundai Motor Company is set to become the
largest car manufacturer in China following the announcement in Beijing of a joint venture
agreement with the Jiangsu Yueda Group.
A passenger car production facility with an
annual capacity of 300,000 units will be developed jointly by Hyundai and Kia, which
already has an agreement with Jiangsu Yueda. The existing facility will be developed to
produce 150,000 units per year by 2002 following the investment of US$ 300 million.
Further development will take production on to 300,000 units per year.
The current Chinese passenger car market of one million units is expected to rocket to
as high as 50 million units by 2010 -- three times the current level of the United States
market -- and Hyundai-Kia-JYG will become China's leading manufacturer.
Under the deal Hyundai has acquired a 20 per cent stake of Yangcheng Yueda-Kia Motors
Co. Ltd., to give a 50-50 split in ownership between Hyundai-Kia and JYG. Hyundai-Kia will
assume management responsibility for the new joint project and the equity share will
change to 51-49 in the company's favor when Chinese law allows.
The new company will trade under the name Jiangsu Hyundai-Kia Yueda Motor Co. Ltd. The
new company will work under current Chinese regulations regarding automobile manufacture
and Chinese car-part production requirements in order to assist the development of the
Chinese automobile industry. Currently automobiles must have 40 per cent local content.
Hall of the People
The new agreement was signed in The Hall of the People in Beijing by former Chinese
Communist Party vice-chairman Honh Hak-Ji, Hyundai-Kia Chairman Chung Mong-Koo and Hyundai
Motor Company President Lee Kye-Ahn.
Chairman Chung said the investment in the Chinese deal would play a major role in
Hyundai-Kia's global development and target to be producing four million units per year by
2010. Entry into the Chinese market was essential, he said, for Hyundai to ensure its
independent survival as one of the world's top automakers.
The joint-venture factory is located in Yangcheng which is on China's northeast coast
and is expected to produce 50,000 units this year and currently employs 500 people. Under
the agreement the factory, which has been building the Kia Pride will produce a new
sub-compact passenger car from the Hyundai-Kia range.
(Jan. 26, 2000)