Hyundai to built small car plant in Brazil

22 September 2008

Hyundai Motor Co, South Korea's largest auto maker, plans to build a $600-million small-car factory in Brazil, to tap rising demand for small cars in South America.

Hyundai Motor said that the factory will have a production capacity of 100,000 small cars and create around 4,000 jobs. The Brazilian unit will be the auto maker's seventh plant outside South Korea, whose construction is expected to be completed in 2011.

The new plant will help Hyundai compete with Japanese rivals Toyota and Honda in Latin America's largest economy, and also stabilise its global revenues, which suffered due to a slump in North American sales.

In the first phase, Hyundai Motor plans to manufacture an all-new flex-fuel car (which can run on both gasoline and ethanol) in the B-segment, starting from the first half of 2011. According to auto stats in 2007, B-segment vehicle sales, which accounted for 65 per cent of total sales in Brazil has attracted leading auto makers including Hyundai to set up base in the South American country.

In the second phase, Hyundai Motor plans to expand the plant, to increase its line-up and export to neighbouring countries, depending on the demand in Brazil.

Despite the relatively high import tax of 35 per cent, Hyundai Motor has sold 36,006 vehicles in Brazil in the first eight months of this year, nearly triple the amount sold a year earlier. Rise in personal income, has boosted vehicle sales in Brazil by 26 per cent in the first eight months of this year, according to the nation's vehicle manufacturer's association.