Hyundai Motor Co., South Korea's largest automaker, and its affiliate Kia Motors Corp. plan to raise their annual sales in Europe by 72% to 1.22 million units by 2010 as their European plants become fully operational, Hyundai's chairman said Tuesday.
Chung Mong-koo said the two automakers target 5.3% of the European auto market in 2010, compared with a 3.3% share by Hyundai and Kia last year. The target was announced at a ceremony as Kia completed building an auto assembly plant in Slovakia's northeastern city of Zilina. "Through the Slovak plant, Kia takes its first step toward a genuine global management," the 69-year-old chairman told an audience of about 1,500 people including Slovak Prime Minister Robert Fico. Chung said he expects the Kia plant in Slovakia to become profitable during the first year of operations. Kia, run by Chung's son Eui-sun, plans to eventually make 300,000 vehicles a year at the €1 billion ($1.35 billion) factory in Zilina. The investment is the largest ever in a single plant in Slovakia and is part of Hyundai's goal to become one of the world's five biggest carmakers by the end of 2010.
On Wednesday, the senior Chung will visit the Czech Republic to attend a ground-breaking ceremony for a €1.1 billion Hyundai plant in Nosovice. Hyundai plans to complete building the Czech plant by March 2009 and eventually add facilities to have a production capacity of 300,000 units a year by 2011, according to the company. "When the Czech plant becomes operational, Hyundai and Kia will both have a vertical business system in the European continent ranging from product development to after-sale services," said Kim Bong-kyung, a Hyundai spokesman.
Hyundai said the European plants would help the company cut transportation costs and losses from volatility in foreign exchange rates. Labor unrest is also cited as one of the main reasons for Hyundai's overseas moves. Auto plants at home have suffered strikes almost every year. Analysts say Hyundai and Kia should put their priority on shaking off their "dirt-cheap" brand image to appeal to European drivers. To raise their brand awareness, Hyundai and Kia plan to sponsor soccer tournaments and expand after-sales networks in Europe, Kim said.
Chung's visit to the European plants was made possible after a court in South Korea granted him permission to travel overseas, his second trip since he was sentenced to a three-year jail term on embezzlement and other charges. February 5, Chung was ordered to serve three years in prison for illegally raising $110 million in slush funds and bribing government officials to get business favors, considered the most high-profile corporate scandal in South Korea. Chung is now appealing the sentence. (yonhapnews.co.kr)