[NEWS IN FOCUS] Hyundai Motor to challenge Japan's dominance in Asean

Industry

Published: 30 Nov. 2023, 17:22 Updated: 30 Nov. 2023, 17:26

[NEWS IN FOCUS] Hyundai Motor to challenge Japan's dominance in Asean

Singapore's Deputy Prime Minister, Lawrence Wong, autographs an Ioniq 5-based self-driving Robotaxi at an event celebrating Hyundai Motor's completion of a plant in Singapore. [HYUNDAI MOTOR]

Hyundai Motor is rapidly expanding its presence in Asean region, a market that has long been dominated by a few Japanese automakers.

Locally produced vehicles and electric vehicles (EVs) may give the company the breakthrough it needs to squeeze into the saturated space.

The Korean carmaker sold a total of 209,831 vehicles in Southeast Asia in the first 10 months of 2023, making it likely to achieve record-high sales in the region this year.

It sold 40,973 units in Vietnam during the same period, placing second after Toyota, and a full 29,633 vehicles in Indonesia, making it that country's seventh-largest automaker. It placed 13th in 2021.

Hyundai Motor’s production plant that assembles electric vehicles in Cikarang, Indonesia. The plant is located 40 kilometers from the country’s capital of Jakarta. [YONHAP]

Hyundai Motor's Asean sales have seen a dramatic rise in recent years. The company sold a total of 21,843 units in the market last year, breaking 20,000 for the first time.

Compared to 2017, that is nearly a threefold jump.

Localization is one of the biggest contributors to the quick growth.

The Hyundai Stargazer, a model exclusive to Southeast Asia, was the region's most popular car, selling a total of 20,081 units. The Creta SUV, also specifically made for the Asean market, placed No. 2 with 15,545 units sold.

Hyundai Motor Group Executive Chair Euisun Chung, center, inspects a battery plant in Karawang Regency, Indonesia. [HYUNDAI MOTOR]

Of six models sold this year in the Asean market, four are manufactured at Hyundai’s Indonesia plant.

“Locally produced vehicles tend to have higher name recognition, and delivery time is shorter as well,” said a Hyundai Motor spokesperson.

Hyundai's achievement is astonishing, as Southeast Asian markets are traditionally considered to be the stronghold of Japanese carmakers. Japanese car brands dominate 90 percent of the auto market in six of the Asean countries.

In Indonesia alone, five Japanese carmakers — Toyota, Mitsubishi Motors, Suzuki Motor, Isuzu Motors and Honda — accounted for nearly 94 percent of 2021's share. Toyota was No. 1 with 32.5 percent of sales.

But things are different in the EV market. A total of 6,084 Ioniq 5s and Kona SUVs were sold in Indonesia this year through October, making up 51.1 percent of the country’s all-electric vehicle market.

The Ioniq 5, which has been manufactured at the Indonesia plant, is the first EV to be made in the Asean region.

Hyundai Motor’s Creta parked in front of the Korean automaker’s plant in Cikarang, Bekasi Regency, Indonesia. [YONHAP]

Asean countries have recently become major destinations for investment and deal-making for global auto companies, mainly due to their geographical advantages and tariff policies.

Asean member nations have car tariffs ranging from 5 percent to 80 percent, but tax waivers are given to cars that are more than 40 percent comprised of localized parts.

Hyundai Motor recently started operating a manufacturing plant in Singapore with a capacity of 30,000 units.

China’s BYD is building a manufacturing facility in Thailand and is in talks with the Philippines and Indonesia about opening additional factories.

Contemporary Amperex Technology, the world’s largest battery maker, is also constructing a $6 billion plant in Indonesia.

“Competition heats up among companies toward ‘friend-shoring,’ who wish to select Asean as the manufacturing hub,” said Lee Ho-geun, an automotive engineering professor at Daeduk University.

“With the largest population right after China and India, Asean is a new market with a high growth rate.”

A total of 3.13 million cars were sold in Asean countries this year, a number expected to reach 4.53 million in 2033.

BY SARAH CHEA, LEE SOO-KI AND KIM SU-MIN [chea.sarah@joongang.co.kr]