Knocking on Europe

Hyundai Motor breaks ground to build a car plant in Czech Republic and Kia Motors dedicates a new car plant in Slovakia

The Hyundai-Kia Automotive Group has earnestly launched its quest for the European car market with the dedication of Kia Motors'new car plant in Zilina City, in northern Slovakia April 24.
Attending the ceremony included Slovakian Prime Minister Robert Fico leading local government officials and Chairman Chung Mong-koo heading Hyundai-Kia Automotive Group officials including Chung Ui-son, president of Kia Motors, who is the son of Chairman Chung and other guests totaling some 1,500. The new car plant was named Kia Motors Slovakia Plant with the annual car production capacity of 300,000 units.
On the next day, the group this time held a ceremony to break ground for a new car plant in Nosovici, northeast Czech, for Hyundai Motor. The plant will produce 300,000 cars annually when completed in 2009.
Chairman Chung said, in his dedication speech, with the completion of the Kia Motors plant in Zilina, Kia Motors has taken the first step for its global management,
adding that he will try to make the car plant the best one in Europe through ceaseless management reform and high productivity. He will try to manage the Kia plant to turn profit in the first year of operation and the addition of Hyundai Motor car plant in Czech in 2010 when it comes online, the group will bring its total car sales in Europe to 1.22 million units, some 5.3 percent share of the car market, the chairman said.
Kia's new plant, built on a 500,000 pyeong land at the cost of 1 billion Euro, is slated to produce the Cee'd and the Sportage in European style. Hyundai Motor's new plant in Czech will turn out the i30, a passenger car, an small minivan, totaling some 300,000 units annually. The two auto plants will exchange car parts to cut costs through synergy effects. The Cee'd and the i30 mid-range passenger cars produced by the two Korean auto plants in the central European countries are expected to be the major car models that the automotive group plans to hike its share of the European car market to 5.3 percent in 2010, a year after Hyundai Motor's new car plant goes online in 2009.
The Korean automotive group now has car plants in the world's three largest car markets in the world, the U.S., Europe and Asia, making a progress in the group's dream to build a global production network of its cars. The progress also means that the automotive group has landed itself in a stiff, head on competition with major auto makers in Europe such as Mercedes Benz, BMW, Volkswagen, Renault, and Peujeot, all global car makers based in Europe.
Almost 85 percent of cars sold in Europe are made by European car makers including those in Germany, France and Italy. The automakers include those controlled by U.S. auto makers such as Saab, and Opel by GM, and Jaguar and Volvo operated by Ford. Foreign auto makers including those from Korea, Japan and the U.S. compete for cuts in the rest of the car market shares standing at 15 percent including Korean, Japanese and U.S. car makers.
Hyundai and Kia have yet to crack the European car market with their respective market shares staying around 1.9 percent and 1.4 percent, which are far below their car market shares in China, India, and the U.S.
They now believe that the time has come for them to really go on offensive for deeper penetration of the car market, now that Kia's new plant in Slovakia is completed and began to turn out the Ceed passenger cars. The new plant produces 150,000 Ceed annually and it will get help from Hyundai's new plant in Czech, just 85 km away from the Kia plant in Slovakia, designed to turn out 300,000 i30s and utility vehicles annually by 2009. These two new car plants will be able to produce 600,000 cars per year in 2010.
There will be some 14 Korean parts makers in the region to supply auto parts to the two auto makers. In addition, Kia's plant in Slovakia has an engine production facilities with the capacity to turn out 200,000 car engines per year and this will be expanded to 600,000 engines per year in 2009 with an investment of 110 million euro. Part of the engines will be supplied to Hyundai's Czech plant and in exchange, Hyundai plant will produce transmissions and supply part of them to the Kia plant. Such cooperation in a number of key areas including marketing, information exchange, and logistics is likely to go a long way to upgrade their operations toward meeting targets as set. Kia launched an intensive marketing campaign just before the completion of its car plant. The sale of the Ceed reached 6,506 units in March, up from 3,000 unit level in the Jan.-Feb. period. Chairman Chung, encouraged by the figures, predicted that the Kia plant will end the initial year in the black by selling some 105,000 units this year and 150,000 units next year. Hyundai will ship 30,000 units of the i30 to Europe from its plants in Korea to sell and the supply of the new sedan will hit 120,000 units in 2009 when the Czech plant goes online producing 90,000 i30s. nw

(right photo) Chairman Chung Mong-koo of the Hyundai-Kia Automotive Group. Dignitaries including Slovakian Prime Minister Robert Fico cut the tape at the dedication ceremony of Kia Motors'new auto plant in Zilina, northern Slovakia, April 24. Prime Minister Fico listens to Chairman Chung Mong-koo of the Hyundai-Kia Automotive Group, 1st L, as he tours the new car plant.