UPDATE : 2018.9.22 SAT 05:13
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Hyundai Motor to set up joint venture in Indonesia to assemble commercial vehiclesPositioned to expand into ASEAN market
President Iki Wibowo of the AG Group (left, foreground) poses with Vice President Lee In Cheol of Hyundai Motors for Commercial Vehicles Export pose for the camera each holding document they signed which provides for the establishment of a joint company. The ceremony took place at the Indonesian Embassy in Seoul on Dec. 12, 2017.

Hyundai Motor will set up a joint venture in Indonesia to assemble commercial vehicles in the populous Southeast Asian country, said Hyundai in a statement. The joint company, due to be set up between Hyundai and Artha Graha in May 2018, will put together knock-down units at a plant that is equipped with facilities designed for Hyundai‘s commercial vehicles to minimize cost and risk, Hyundai said. It will manage production, sales, after sales service and so on.

Established in 1973, the AG Group is the 10th largest conglomerate in Indonesia.

The joint venture will produce about 2,000 Xcient and New Mighty trucks annually from late 2018. Currently, Japanese carmakers account for more than 90 percent of Indonesia’s commercial vehicle market, as they have operated local assembly lines since 1970s, Hyundai said.

Hyundai said the joint venture will set up a solid marketing and service network in the fast-growing Indonesia vehicle market, alongside a stable production base. “Thus we will secure a dynamic management for rapid market response,” said the Korean automaker.

As Indonesia is pushing ahead with large reclamation and mine development projects, local demand for commercial vehicles is expected to exceed 100,000 units in 2020, up from the 76,000 units estimated for this year. In 2016, about 70,000 commercial cars were sold in Indonesia.

A joint venture signing ceremony was held at Indonesian Embassy in Yeoido, western Seoul, on December 12, with officials and business leaders from both Korea and Indonesia attending. Among those present were Moon Seung-uck, a senior official of the Ministry of Industry, Trade and Energy, Indonesian Ambassador to Korea Umar Hadi, Triawan Munaf, head of Indonesia’s Creative Economy Council, Han Seong-gwon, president of Hyundai’s commercial vehicles business division, Lee In-cheol, senior vice president of Hyundai’s commercial vehicle export division and AG Group President Iki Wibowo.

The joint venture also aims to explore new markets in neighboring Southeast Asian countries. Hyundai has high expectations for Southeast Asian countries, which currently impose 30% to 80% tariffs on Korean-made vehicles. But vehicles produced in Indonesia can be exported free of duty to neighboring countries under the ASEAN Free Trade Agreement (AFTA), said Hyundai. AFTA is a trade bloc agreement by the Association of Southeast Asian Nations supporting local manufacturing in all ASEAN countries.

The joint venture marks the first outcome in the private business sector of President Moon Jae-in‘s “New Southern Policy” unveiled during the Korea-Indonesia Business Forum on November 9. The initiative aims to deepen ties and economic cooperation between Korea and Southeast Asian nations. President Moon pledged to “dramatically strengthen cooperation with ASEAN.”


Indonesian Ambassador to Korea Umar Hadi observed that the planned joint venture between Hyundai Motor and AG Group is expected to deepen bilateral economic cooperation between Indonesia and Korea.

“Hyundai will extend strong support to the Indonesia joint venture to serve as a bridge for growing economic partnerships of the two economies,” said Lee In-cheol, senior vice president of Hyundai’s commercial vehicle export division. “Starting with the Indonesian market, we will seek to promote expansion into nearby countries,” he added.

Hyundai Motor signed a deal to supply 500 Xcient heavy-duty trucks to Indonesia in September. This was Hyundai’s largest truck export contract. “The deal will be a great opportunity for Hyundai Motor to promote the Xcient truck's excellence in quality and competitiveness in the Indonesian market," said a Hyundai Motor official earlier. In an effort to expand its overseas markets, Hyundai Motor will continue to develop strategic models that satisfy local consumers' needs around the world, he added. Hyundai Motor said the 500 trucks are expected to be used at a reclamation construction site in the capital Jakarta.

Hyundai Motor has expanded its market presence in commercial vehicles after clinching a deal to supply 500 Aerocity buses to Turkmenistan in 2016. It supplied 200 County mid-size buses to Myanmar earlier this year. The carmaker also supplied 200 mid-size trucks to Saudi Arabia. It also signed a deal in April to supply 100 Xcient trucks to Turkmenistan.

Hyundai offers a diverse lineup of products with world-class competitiveness to customers in over 200 countries through more than 6,000 dealers and overseas regional sales and production subsidiaries. It is actively pursuing local markets by establishing production bases in key international markets. Hyundai will continue to create and build a more effective R&D, sales, and production network to expand its global market presence.

Hyundai Motor’s brand image has evolved from “dependable quality” to “the most satisfying brand.” Its brand value grew 5% in 2017 to US$13.2 billion versus 2016, keeping up the ranking No. 35 in Interbrand Best Global Brands 100. Hyundai Motor has boosted significantly its brand awareness among customers, while creating an enhanced profile across the areas of culture, sports, corporate social responsibility.

Kim Sua  edt@koeapost.com

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