Hyundai Motor Group in China: increases production capacity to 1.9 million passenger cars

Beijing Hyundai enhances high-end vehicles while Dongfeng Yueda Kia focuses on SUVs and sports sedan

2011/07/08

Summary
Enhancement of annual production capacity of passenger cars: from more than 1 million in 2011 to 1.9 million by 2015
Entry into production of commercial vehicles: Hyundai forms an alliance with Sichuan Nanjun Automobile, preparing production capacity of 300,000 a year in Sichuan by 2015
Annual engine production capacity: Hyundai boosts its production capacity to more than 1.5 million units for passenger cars in 2012, also building an engine plant for commercial vehicles
Hyundai Motor Group's model plan for local production

Summary

The Hyundai Motor group sold 5.7 million (up 19.8% year-on-year) in 2010, becoming the fifth largest auto manufacturer in the world. Among them, it sold 1.093 million passenger cars in China (including 57,000 that it imported and sold), which accounts for about 19% of the group's total sales volume, thus contributing largely to its growth.

Hyundai's passenger car business in China has been growing rapidly in the last few years. In 2009, sales of vehicles that it manufactured locally in China increased by 86% year-on-year to 812,000. In 2010, the company suffered from a shortage of its production capacity, but boosted sales by 27.6% year-on-year to 1.036 million. Under the future sales plan, the company expects to sell 1.15 million in 2011 and at least more than 2 million in 2015. On the other hand, it has a production capacity of 1.03 million in June 2011 and plans to boost it to 1.63 million in 2012 and further to 1.93 million by 2015. Yet, it is assumed to suffer from a shortage of production capacity for the time being.

In addition, concerning commercial vehicles, the company will make a full-scale entry into the commercial vehicle market through its alliance with Sichuan Nanjun Automobile as it expects the expansion of demand due to the Chinese government's promotion of the development of the western area of China.

The following reports the recent activities of the Hyundai Motor Group in China.

Hyundai Motor group's business plan in China

	Beijing Hyundai Motor Co., Ltd.	Dongfeng Yueda Kia Motors Co., Ltd.
Business policy	Among passenger car manufacturers in China, the company aims to make it into the top three in terms of the product quality in 2011 and into the top five in terms of the brand image in 2014 (from Beijing Hyundai Motor "GQ-3.3.5.5" product quality improvement strategy)	The company aims to make it into the top 10 among passenger car manufacturers in China in terms of the sales volume in 2011. In order to differentiate itself from Beijing Hyundai Motor, the company focuses on SUVs/sports sedans for young customers and increasingly launches compact cars.
	The company will build a five-plant structure for passenger cars by 2015 and will achieve a profit margin of more than 10% on sales (including new energy vehicles, the company turns an operating profit from each of its models).
	The company will increase the lineup of its models that it manufactures locally in China to about 20 by 2015, enhancing the introduction of new high-end models including HEVs.
Sales target	720,000 in 2011 (including 252,000 middle-class and high-end vehicles/35% of the total)	430,000 in 2011
Sales target	1.2-1.5 million in 2015 (more than 7% share of the passenger car market in China)	730,000 by 2012
Production	From 600,000 at the end of 2010 to 900,000 in July 2012, more than 1.2 million by 2015, and 1.6 million in 2016 or later	From 430,000 at the end of 2010 to 730,000 at the end of 2012
Sales structure	The number of "4S" dealers: about 400 in October 2009 (in addition, 110 satellite dealers, 130 service shops), 420 at the end of 2010 (in addition, 180 satellite dealers), and 520 dealers at the end of 2011 (in addition, 200 satellite dealers).	The number of "4S" dealers: 290 at the end of 2009, 359 at the end of 2010, more than 440 by the end of 2011.
Sales structure		The company intends to make its brand better known by promoting new Corporate Identity (CI) activities at "4S" dealers, expanding dealers in midsize and small cities, setting up new dealers intensively in midland/western part of China, increasing the number of customers through compact cars.

Source: Beijing Hyundai Motor "The Twelfth Five-Year Plan (2011-2015)" and others
(Note) "4S" are the initials of Sale，Spare part (parts, spare parts), Service (after-sales service), and Survey (information feedback). Dealers with such four functions are called "4S" dealers.

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