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.

Management responsibility

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.

Northeast coast

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)