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Hyundai Motor Group to invest 3.1 billion dollars in U.S.

Hyundai Motor Group to invest 3.1 billion dollars in U.S.

Posted January. 18, 2017 07:10,   

Updated January. 18, 2017 07:20

한국어

South Korea's largest automaker Hyundai Motor Group plans to invest 3.1 billion U.S. dollars in the United States over the next five years in a pre-emptive response to incoming U.S. President Donald Trump's pressure on global automakers for increasing their investment in the U.S.

Hyundai Motor Group President Chung Jin-haeng unveiled the investment plan during a meeting with foreign correspondents in South Korea on Tuesday. “The planned investment will be used for research and development expenditures for future technology such as self-driving cars, artificial intelligence and other future technologies and retooling of existing factories in the United States,” Chung said.

The amount is a 50-percent increase from 2.1 billion dollars Hyundai invested in the U.S. over the last five years. Hyundai said it may consider building additional production facilities in the U.S. The group has production plants in Alabama (Hyundai Motor) and Georgia (Kia Motors).

Hyundai's plan will likely deal a severe blow to South Korea's domestic auto industry, whose production volume was surpassed by that of India last year to fall out of the global "big five" auto-making countries for the first time in 11 years. Analysts attributed the decline to the high-cost structure of domestic production plants and frequent labor strikes. If Hyundai increases its U.S. production due to the external factor of the Trump presidency, the group's exports of Korean-made vehicles to the U.S. market will decrease.

 

Hyundai Motor and its affiliate Kia Motors sold 1.4 million vehicles in the U.S. last year. Of them, 730,000 were produced at the U.S. plants, while the other 670,000 cars were manufactured at domestic plants and shipped to the U.S. If the group reduces domestic production by 100,000 cars, the domestic plants would lose about 2 trillion won (1.7 billion dollars) in sales revenue. The group's parts suppliers will also be hit hard, as they are expected to suffer from 1 trillion won (850 million dollars) decrease in sales.

Some experts say that Korean politicians' rush to propose bills regulating domestic corporation will accelerate such industrial hollowing out.



Eun-Taek Lee nabi@donga.com