Hyundai Mobis to open plant in Czech Republic

Hyundai Mobis, Korea’s largest auto parts manufacturer, said yesterday that it will build an automobile lamp plant in the Czech Republic by 2017.

The affiliate of Hyundai Motor Group said yesterday it will invest 95.65 million euros ($128 million) to build the plant on 180,000 square meters of land (44 acres) near Ostrava, about 370 kilometers (229 miles) east of Prague.

The company said that it will sign an investment agreement with the Czech government at Hrzansky Palace in Prague on Tuesday. Hyundai Mobis President Chung Myung-chul and Czech Prime Minister Bohuslav Sobotka will be at the ceremony.

The Czech government reportedly proposed various incentives to the company, including tax benefits.

The plant will have an annual capacity to supply lamps to 750,000 vehicles and will mostly produce head lights and rear lights that will be fitted to cars produced at Hyundai Motor’s plant in No?ovice, which is 30 minutes away from Ostrava, and the Kia Motors plant in Slovakia.

“By establishing a core parts production system in Europe with the lamp plant in the Czech Republic, we are expecting to reduce logistics costs and time as well as currency risks,” the company said in a release. “In particular, we are contributing to boosting the competitiveness of Hyundai and Kia’s overseas plants and we will actively try to win orders from automakers in Europe.”

With the latest plant, Hyundai Mobis will have eight auto parts factories overseas, in China, India, Slovakia and the Czech Republic. For modules, it has 12 factories in eight countries outside of Korea, four of which are in Europe.

The company has been a particularly big supplier to its affiliates Hyundai and Kia. Hyundai Mobis has a module plant at Hyundai’s No?ovice factory and at Kia’s Slovakia plant with an annual capacity of 300,000 units each. It produces chassis, driver seats and front-end modules.

The company has seen its sales in modules and auto parts expand in the first half of this year to 14.2 trillion won in revenue, up 6.8 percent from a year ago. Hyundai Mobis’ total revenue in the first half was 17.8 trillion won.

Revenues from its European entities increased 17.5 percent year-on-year in this first half, beating China, which marked a 11.4 percent year-on-year increase.

BY joo kyung-don [kjoo@joongang.co.kr]