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May 2, 2007

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Hyundai Motor Manufacturing Czech Starts Work on New Plant Construction

Hyundai Motor Co. today broke ground for the construction of its 1.1 billion Euro manufacturing plant in Nosovice, Czech Republic. When completed in March 2009, Hyundai Motor Manufacturing Czech (HMMC), a fully-owned subsidiary of Seoul-based Hyundai Motor Co., will have the capacity to build 200,000 vehicles annually beginning with the i30 C-class five-door hatchback and a yet-to-be-revealed compact minivan (codenamed YN). In the second phase, an additional 100,000 units per annum of capacity will be added by 2011 to build a third model.

The newly established manufacturing arm will strengthen Hyundai's price competitiveness and enhance awareness of the Hyundai brand, thus enabling Hyundai to compete on an equal footing with other European-based automakers.

"With Hyundai´s accumulated manufacturing experience in Korea, China, the USA, Turkey and India, we have created a truly state-of-the-art manufacturing facility that will set the standard for efficiency and productivity.

When combined with the high capabilities of the Czech worker and the Czech reputation for excellent craftsmanship, HMMC has the potential to make the highest quality cars in all of Europe," said Hyundai Motor Co. Chairman and CEO Chung Mong-Koo.

 


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HMMC and the plant of its affiliate Kia Motors Slovakia located just 85km away stand to benefit from synergies generated by their close proximity and the sharing of suppliers and other support functions.

Eleven key Korean-based suppliers to the Hyundai Kia Automotive Group are already in operation serving the Kia Motors Slovakia plant. An additional three have announced intentions to set up shop in the region, bringing the total to 14.

Hyundai deemed a European manufacturing base essential in order to face the intensifying competition in the European C-segment, which accounts for approximately 30 percent of EU sales. As part of its preparations to better serve the needs of its European customers, Hyundai Motor Co. invested $50 million Euros in a European Design and Technical Center which designed the i30 hatchback and estate wagon. And last year, it opened a new European sales and marketing headquarters in Offenbach to better support local sales. The Czech plant is the final link in the chain providing Hyundai will have the full range of local capabilities to serve the European market from design and engineering, to production, marketing, sales and after-service.

In the first phase, it is anticipated that 2,845 new jobs will be directly created by the HMMC. An additional 675 jobs will be created by the second phase expansion, bringing total employment at HMMC to 3,520 people. At the supplier level, it is anticipated a further 4,000 jobs will be created, providing a significant impetus to the growth and development of the Czech economy. In compliance with EU guidelines, Czech authorities extended incentives valued at 15 percent of the total investment, the maximum permissible under EU regulation.

A European manufacturing base was deemed essential in order to achieve Hyundai's long-term sales targets in Europe. With HMMC coming on-stream in 2009, Hyundai's European sales are forecast to grow to 620,000 units in 2010. In 2003, Hyundai Motor Europe sold 300,000 units and in 2006, sales passed the 400,000 mark (including Russia and Turkey sales).

(April 25, 2007)


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