Hyundai Motor from South Korea has signed a tentative agreement on the construction of new manufacture in Indonesia on Tuesday, its first car manufacturing facility in Southeast Asia and a crack in Japanese competition, the dominant industry.
The deal falls between Hyundai and Kia Motors, a company that is dealing with an extended sales drop this year in China. Hyundai Motor said that it will spend approximately $1.55 trillion in the Indonesian automotive factory, including the cost of production and service from now to 2030.
The facility will begin production at the end of 2021, with an annual capacity of 150,000 vehicles in Bekasi, east of Jakarta, and a plan to increase it to 250,000 vehicles a year, says Hyundai. Hyundai plans to build small SUVs and multifunctional vehicles (MPVs), while Southeast Asian-specific Electric Vehicles (EVs) will be considered.
To avoid import tariffs of 5 percent to 80 percent in the ASEAN zone, Hyundai said it is building production facilities. Indonesia, the largest car market in the country and countries belonging to the Southeast Asian Nations Association (ASEAN), the plant said. It will accommodate the factory.
According to the research company LMC Automotive, Hyundai is far short of Japanese opponents in Southeast Asia, with sales of 122,883 vehicles, versus Toyota’s 854,032 from January to September.
Car manufacturers worldwide expect US President Donald Trump to decide whether to charge US car and car parts imports up to 25 percent of their tariffs after 180 days this week of review.
To decide whether to extend the review or to impose tariffs that automakers warning of could have cost jobs and dramatically improve vehicle prices, Trump has been briefed in advance of the self-imposed deadline he sets in May.
A tariff delay could lead to a presidential campaign in mid-2020, and experts say that it could be more difficult for Trump to impose a large consumer product tariff close to elections.
Thursday was denied by the White House. Before the deadline, foreign automakers were eager to emphasize their US investments to try to deter Trump from using duties that they argue might cost US jobs.