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

 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
 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.
 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.



Enhancement of annual production capacity of passenger cars: from more than 1 million in 2011 to 1.9 million by 2015

 In June 2011, Beijing Hyundai Motor is currently constructing its third plant, planning to start operations in July 2012. Combined with a fourth plant, the construction of which it has newly announced, the company will prepare a production capacity of more than 1.2 million a year by 2015. In addition, it is currently planning the construction of a fifth plant, thus building a production capacity of 1.6 million per year in 2016 or later.

 Also, Dongfeng Yueda Kia Motors, which has already held a production capacity of 430,000 a year, is currently planning to construct its third plant with a production capacity of 300,000 a year in Nanjing city, Jiangsu province, and will secure production capacity of 730,000 per year by the end of 2012.

Hyundai Motor Group's actual production volume and production capacity of passenger cars in China

  Actual production volume
of passenger cars (unit)
Annual production capacity
of passenger cars
(1,000 units)
2010 Jan.-May
2010
Jan.-May
2011
2011
(Full-year
target)
As of
June
2011
After expansion
(Planned year)
Beijing
Hyundai
Motor
The first plant
(Beijing)
704,441 270,116 306,721 720,000 300 No expansion plan
The second plant
(Beijing)
300
The third plant
(Beijing)
Under construction
(The construction began
in November 2010.
Operations are planned
to begin in July 2012)
- 0 300 (end of 2012)
→400 (-2015)
The fourth plant Currently being planned
(Beijing is a likely location)
- 0 200 (-2015)
→ 300 (2016 or later)
The fifth plant Currently being planned
(annual production capacity
of 300,000.
Operations are planned
to begin in 2015.
Details including location
have not been made public)
- 0 300 (2016 or later)
total 704,441 270,116 306,721 720,000 600 900 (2012 year-end)
→more than 1200 (-2015)
→ 1600 (2016 or later)
Dongfeng
Yueda
Kia
Motors
The first plant
(Yancheng)
112,391 46,068 34,567 430,000 130 No expansion plan
The second plant
(Yancheng)
225,971 88,954 120,640 300
Nanjing plant Currently being planned
(currently awaiting approval
by the government)
- 0 300 (end of 2012)
total 338,362 135,022 155,207 430,000 430 730 (end of 2012)
Grand total 1,042,803 405,138 461,928 1,150,000 1,030 1630 (end of 2012)
→ 1930 (-2015)
→ 2330 (2016 or later)

Beijing Hyundai Motor Co., Ltd.

Construction of the third plant (Beijing) began to start operations in 2012, preparing production capacity of 400,000 a year in 2012 or later
 In November 2010, Beijing Hyundai Motor started the construction of their third Beijing plant in Shunyi District, Beijing (Yangzhen Industrial Development Zone, which is 20km away from the second Beijing plant). The first-stage construction is scheduled to be completed in July 2012. The new plant is considered to be Hyundai Motor's flagship plant abroad.
 The total investment in the third Beijing plant is worth about USD1.246 billion (including about USD1 billion in facilities for passenger cars and about USD200 million in facilities for engines). The site area is 1.55 million square meters. When the operations commence, the initial production capacity is set to be 300,000 passenger cars a year (200,000 engines). When the second-stage construction is completed, the company plans to boost the capacity to 400,000 a year (400,000 engines).
 The company introduces flexible production in their third Beijing plant. It intends to aggressively introduce multiple luxury middle-class and high-end vehicles, and new energy vehicles in the future. The number of employees at the assembly plant is said to eventually increase to 1,030.
 When the construction of their third Beijing plant is completed, combined with the first and second plants, Beijing Hyundai Motor will boost its production capacity to 1 million passenger cars a year (900,000 engines). The number of employees will increase to more than 10,000. The company expects to boost output to RMB100 billion.
The fourth plant with an annual production capacity of 300,000 is planned. Operations will begin as early as in 2014
 In December 2010, Beijing Hyundai Motor unveiled its plan to construct a fourth passenger car plant. Beijing city is said to be the most likely candidate location for the fourth plant. The construction of the fourth plant will be completed by 2015 (Operations are to begin as early as 2014). The new plant will have an initial production capacity of 200,000 passenger cars a year, which the company plans to increase to a further 300,000.

Dongfeng Yueda Kia Motors Co., Ltd.

Dongfeng Yueda Kia Motors is awaiting approval for the construction of its third plant in Nanjing with an annual production capacity of 300,000, planning to complete it in 2012
 Dongfeng Yueda Kia Motors is currently planning to build a third passenger car plant with a production capacity of 300,000 a year in Nanjing city, Jiangsu province (currently awaiting approval from the government). The construction will be completed by 2012. The likely candidate locations are said to be Nanjing Jiangning Economic & Technical Development Zone or Nanjing Banqiao Economic & Technical Development Zone in Nanjing City.

 



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

 Hyundai Motor targets to sell 160,000 commercial vehicles (3% share of the market) under the Hyundai brand in China by 2015. In April 2011, the company formed an alliance with a major commercial vehicle manufacturer in China - Sichuan Nanjun Automobile - to establish a joint venture for commercial vehicles. Hyundai Motor intends to make a full-scale entry into the commercial vehicle market in China.

Hyundai Motor Group's annual production capacity plan for commercial vehicles in China

  Production volume (unit) Annual production
capacity (1,000 units)
2010 Jan.-Apr.
2010
Jan.-Apr.
2011
2011
(Target)
As of
June 2011
After expansion
(Planned year)
Ziyang truck plant
(site area: 2 million square meters)
80,212 28,721 27,637 90,000 100 No plan
Chengdu bus plant 2,585 684 829 10
Ziyang new plant - - - 0 160 (2013)
Sichuan Hyundai Motor total
(including chassis)
82,797 29,405 28,466 90,000 110 110 (2012)
→ 270 (2013)
→ 300 (-2015)
→ more than 400 (2017)
→ more than 700 (2020)

(Note) Production volume of Sichuan Hyundai Motor Co., Ltd. in 2010 and 2011 are those of Sichuan Nanjun Automobile Group, which is its founding body (all figures include chassis).

Hyundai Motor establishes a commercial vehicle joint venture in Ziyang city, Sichuan province with Sichuan Nanjun Automobile Group

 In April 2011, Hyundai Motor signed a contract to establish an equally-owned commercial vehicle joint venture (tentative name: Sichuan Hyundai Motor Co., Ltd.) jointly with Sichuan Nanjun Automobile Group, which is a commercial vehicle manufacturer. The joint venture company (total investment: 600 billion won) will be established in the second half of 2011. It will utilize Sichuan Nanjun Automobile's existing plants in Ziyang/Chengdu, Sichuan province.
 The joint venture company will expand the lineup of trucks and buses, and engines under two brands - Nanjun/Hyundai - including EV/energy-saving/CNG versions.
 The joint venture company is aiming to produce 160,000 commercial vehicles (including 150,000 trucks and 10,000 buses) a year by 2013 and 300,000 per year in 2015. It plans to start operations of its new plant by 2013. Expecting the expansion of demand under the government's development plan for the western part of China, the company will boost production further to 400,000 in 2017 and further to 700,000 in 2020. Hyundai intends to foster the new joint venture company into one of the world's leading commercial vehicle plants capable of developing products independently.

 



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 started operations of its third plant in Rizhao at the end of 2010, preparing a production capacity of 600,000 engines for passenger cars per year. When the production capacity of the engine plants in Beijing, Yancheng, and Rizhao, under the umbrella of its group is combined, the company plans to have production capacity of more than 1.5 million at the end of 2012. In addition, it will prepare a production capacity of 2.4 million in the future.

 Also, concerning engines for commercial vehicles, Hyundai's joint venture partner established an engine joint venture with a local company. Besides, there is a plan to build an engine production facility in the Ziyang commercial vehicle plant of Sichuan Hyundai Motor.

Hyundai Motor Group's engine production capacity in China

  Production volume (unit) Annual production
capacity (1,000 units)
2009 2010 As of
June 2011
After expansion
(Planned year)
Beijing Hyundai
Motor Co., Ltd.
The first Beijing plant 530,098 588,688 300 No expansion plan
The second Beijing plant 200
The third Beijing plant 0 200 (end of 2012)
→ 400
The fourth plant,
The fifth plant
(Currently being planned,
details including
location are undecided)
0 0 (end of 2012)
→ n.a.
total 530,098 588,688 500 700 (end of 2012)
→ 900
Dongfeng Yueda
Kia Motors
Co., Ltd.
The second plant (Yancheng) n.a. n.a. 200 No expansion plan
total n.a. n.a. 200 No expansion plan
World Industries
ACE (Shandong)
Co., Ltd.
The first Rizhao plant n.a. About
300,000
100 No expansion plan
The second Rizhao plant 300
The third Rizhao plant 200
total n.a. About
300,000
600 600 + α (end of 2012)
→ 1,300
Total (for passenger cars) n.a. More than
888,000
1,300 More than 1,500
(end of 2012)
→ 2.400
Sichuan Hyundai Motor Co., Ltd.
(Ziyang engine plant)
- - 0 n.a.
(Reference)
CSR Yuchai Nanjun Engine Co., Ltd.
(Established in March 2011.
Operation will begin as
early as at the end of 2011)
n.a. 100 (2011)
→ 200 (-2015)

(Note) CSR Yuchai Nanjun Engine Co., Ltd. is a joint venture company with two companies - Sichuan Nanjun Automobile (a joint venture partner in China ) and Yuchai Machinery (Guangxi) Co., Ltd.

Engine plant for passenger cars: the third plant of the Rizhao engine plant started operations at the end of 2010

 "World Industries ACE (Shandong) Co., Ltd. (WIA)" (so far, more than 50% of the engines that it produces have been supplied to Hyundai group's passenger car plants in Russia/India/Turkey), which is considered to be a global engine plant in the Hyundai Motor Group, started operations of its third plant in Rizhao, Shandong province at the end of 2010, thus newly preparing a production capacity for 200,000 engines. With this, combined with the existing plants, the production capacity of the Rizhao engine plant has been boosted to 600,000.

 The total investment in the third plant is worth USD140 million. The building area of the plant is 6400 square meters. The third plant holds a production line for engine components including cylinder shafts and crank shafts.
 Weiya Automotive Engine (Shandong) plans to boost the production capacity of the Rizhao engine plant from the current 600,000 to 1.3 million per year in the long run.

Engine plant for commercial vehicles: To establish an engine joint venture by a joint venture partner for commercial vehicles jointly with a local company

 In March 2011, Sichuan Nanjun Automobile Group established an engine joint venture, CSR Yuchai Nanjun Engine Co., Ltd., in Ziyang city, Sichuan province with CSR and Yuchai Machinery (Guangxi). The joint venture company (with a total investment worth RMB3 billion. Capitalized at RMB300 million) produces engines for vehicles and trains/ships/onshore power generators. Operation will begin as early as at the end of 2011. The production capacity for commercial vehicles is 100,000, which will be boosted to 200,000 by 2015. The joint venture company will be built in the vicinity of Sichuan Hyundai Motor Co., Ltd., which is a joint venture plant for commercial vehicles between Hyundai and Sichuan Nanjun Automobile and is expected to supply engines to Sichuan Hyundai Motor.

 



Hyundai Motor Group's model plan for local production

 Beijing Hyundai Motor is planning to launch middle-class and high-end models while Dongfeng Yueda Kia Motors is planning to introduce new models centered on compact cars, SUVs, and sports sedans. In addition, local production of HEVs is also planned to begin in 2013 or later.

Beijing Hyundai Motor's model plan (from June 2011)

Segment Model Launch year Details
2011 2012 2013 2014 2015
A/B First own-
brand model
    ○→      The model is Beijing Hyundai Motor's first own-brand passenger car.
C Avante
(also known as
"New Elantra
Yuedong")
         The Avante is the latest version (sedan, renamed as Avante) of the 8th-generation Elantra. 4530/1775/1435 with a wheelbase of 2700mm. The third plant (Beijing) produces the model. It comes with a 1.6L/1.8L Dual-VVT/1.6L GDI turbo engine and a 6-speed AMT.
Avante
Hybrid LPi
(development
code: HD LPi)
    ○→ ?      The Avante Hybrid LPi is a HEV sedan that is based on the Avante. It comes with a 1.6L LPG engine, CVT, and a lithium-ion polymer battery. The fuel economy is 17.2km/L.
D 5th-generation
Azera
(Azera HG)
         The 5th-generation Azera is the latest version of the Azera (middle-class, high-end sedan). 4910/1860/1480 with a wheelbase of 2845mm. It comes with a 2.4L/3.0L MPI engine. The company plans to start importing and selling the model in the near future before the local production begins.
Sonata HEV     ○→      The Sonata HEV is a HEV sedan that is based on the Sonata. It comes with a 2.4L gasoline engine (max. output 126kW) and a drive motor with a max. output of 30kW. The company has begun importing and selling the model in 2011 before local production began.
Santa Fe HEV     ○→ ?      The Santa Fe HEV is a HEV version SUV that is based on the new Santa Fe. It comes with a 2.4L engine, a lithium-ion polymer battery (rated voltage 270V, capacity 5.3Ah), a motor with a max. output of 30kW, and a 6-speed AT. The fuel economy is 6.2L/100km. The company plans to start importing and selling the model in 2001 before the local production begins.
Large
displacement
SUV
  ○→        The model is a large-displacement SUV that is based on the new SantaFe. The third plant (Beijing) produces the model.
High-end
passenger car
  ○→        The model is a D-segment high-end passenger car. The third plant (Beijing) produces the model.

Dongfeng Yueda Kia Motors's model plan (June 2011-)

Segment Model Launch year Details
2011 2012 2013 2014 2015
A/B K2          The K2 is a next-generation model (based on the QB) of the Rio, which is an exclusive model for the Chinese market. 4370/1700/1460 with a wheelbase of 2570mm. The model comes with a 1.6L/1.4L Kia's new γ engine and a 5-speed MT/4-speed AT. The K2 shares the same platform with the Verna.
Soul Hybrid         ○→ ?  The Soul Hybrid is a HEV that is based on the Soul. It comes with a 1.6L engine, a lithium-ion polymer battery (180V, capacity 5.3Ah), a motor with a max. output of 15kW, and CVT.
D K5 Hybrid         ○→ ?  The K5 Hybrid is a HEV sedan that is based on the K5 (new Optima). 4845/1835/1455 with a wheelbase of 2795mm. The model comes with a 2.0L γ-type HEV-version engine.
EV EV-version CUV       ○→    The EV-version CUV is Dongfeng Yueda Kia Motors's first mass-produced EV model (5-door, 4-seat) that the company develops based on the EV concept car, Naimo (KND-6). Naimo is 3890mm long, 1844mm wide, and 1589mm high with a wheelbase of 2647mm. It comes with a permanent magnet synchronous motor (PMSM: max. output: 80kW, max. torque: 280Nm) and a lithium-ion polymer battery (capacity 27kWh).

 


(Reference)

Sales volume of each of Hyundai Motor Group's models in China

Sales volume of each passenger car model under Hyundai/Kia brand
(units)
  2007 2008 2009 2010 Jan.-May
2010
Jan.-May
2011
2011
(Target)
The fourth-generation Sonata 2.0L 25,528 17,411 5,417 4 4 0 600,000
The eighth-generation Sonata
(Sonata YF) 2.0/2.4L
- - - - - 12,319
Elantra 2box 1.6L 3,277 889 4,511 0 0 0
Elantra 3box 1.6/1.8L 117,056 116,872 167,094 152,641 70,889 55,100
Yuxiang NF
(the sixth-generation Sonata: NFC)
13,882 7,205 1,093 3,309 1 0
New Accent 26,665 24,628 60,379 68,463 34,541 11,920
Yuedong 3box 1.6/1.8L
(Elantra Yedong: HDC)
- 85,974 239,449 233,344 99,456 88,326
Lingxiang 2.0/2.4L
(the seventh-generation Sonata)
- 319 15,606 22,344 7,456 6,584
i30 1.6/2.0L - - 12,494 19,858 11,121 5,689
The fifth-generation Sonata 1.8/2.0L - - 14,921 38,881 17,482 14,700
Tucson 2.0/2.7L 44,729 41,208 49,345 56,527 23,768 25,711
ix35 2.0/2.4L - - - 63,278 9,892 40,895
Verna 1.4/1.6L - - - 44,359 0 47,093 120,000
Beijing Hyundai Motor
(Hyundai brand) total
231,137 294,506 570,309 703,008 274,610 308,337 720,000
Optima 1.8/2.0L 6,700 4,103 2,573 3,336 815 988 380,000
Cerato 1.6/1.8L 62,786 60,255 83,870 70,174 30,700 26,756
Cerato Wagon 1.6L 0 14,097 19,136 12,573 6,134 2,756
Rio 1.4/1.6L 18,512 29,898 41,061 44,022 17,308 17,518
Forte 1.6/2.0L - - 48,298 105,751 41,175 52,426
Soul 1.6/2.0L - - 1,702 17,264 8,951 4,724
Accent 1.3/1.6L 5,309 - - - - -
Carnival 2,416 1,155 858 455 454 1
Sportage 2.0/2.7L 5,713 32,500 43,888 67,740 30,277 19,548
Sportage R 2.0/2.4L - - - 11,713 0 25,589
K5 2.0/2.4L
(dubbed the fifth-generation Optima)
- - - - - 8,681 50,000
Dongfeng Yueda Kia Motors
(Kia brand) total
101,436 142,008 241,386 333,028 135,814 158,987 430,000
Grand total (Hyundai/Kia brand) 332,573 436,514 811,695 1,036,036 410,424 467,324 1,150,000
Sales volume of each passenger car model under Chinese (Hawtai/JAC) brand based on Hyundai's models
  2007 2008 2009 2010 Jan.-May
2010
Jan.-May
2011
2011
(Target)
Shengdafei (former Santa Fe) 11,248 12,254 46,696 77,159 30,816 33,139 n.a.
Telaka
(the second-generation Terracan)
1,496 3,007 4,179 4,280 1,757 2,035
Total (Hawtai Motor Group) 12,744 15,261 50,875 81,439 31,573 35,174
Refine(Starex: H1) 40,049 36,304 46,033 64,675 28,319 28,921
Total (JAC) 40,049 36,304 46,033 64,675 60,892 64,095
Grand total (Chinese brand models
based on Hyundai's models)
52,793 51,565 96,908 146,114 60,892 64,095

Sales volume of each commercial vehicle model under Sichuan Nanjun Automobile Group's Nanjun brand

  2007 2008 2009 2010 Jan.-Apr.
2010
Jan.-Apr.
2011
2011
(Target)
Heavy-duty truck 2,266 2,304 2,417 3,623 906 1,256 n.a.
Medium-duty truck 13,969 16,517 22,582 29,032 10,520 9,554
Light-duty truck 26,276 29,804 36,441 36,581 13,182 13,061
Mini-duty truck 3,220 5,517 8,803 10,720 4,304 3,895
total (including chassis) 45,731 54,142 70,243 79,956 28,912 27,766
Large bus 16 14 61 84 32 74
Medium bus 901 1,034 1,305 1,509 359 464
Light bus 411 635 764 938 217 301
total (including chassis) 1,328 1,683 2,130 2,531 608 839
Grand total
(Sichuan Nanjun Automobile)
47,059 55,825 72,373 82,487 29,520 28,605 90,000

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