[Exclusive] Hyundai Motor to Cease Domestic Production of Gasoline Small Engines

Hyundai Motor Accelerates Electrification at Ulsan Plant in Korea
Domestic Discontinuation of Small Gasoline 'Kappa Engine' Expected
Used for Casper and Other Domestic Compact Cars... Applied to Export Small Sedans
Some Volume Transferred to Hyundai Wia... Local Production Also Concurrently Conducted

Hyundai Motor Company is ending domestic production of small gasoline engines. Production of internal combustion engines for compact cars, which have low domestic demand, will be transferred to overseas factories or affiliates, while domestic production will be reorganized to focus on eco-friendly vehicles such as hybrids and electric cars. Recently, Hyundai Motor Group has begun to redraw its production map according to regional demand.

According to a report by Asia Economy on the 14th, last month Hyundai decided to discontinue the domestic production of the small gasoline Kappa engine and held discussions with the labor union and the Employment Stability Committee to discuss workforce reallocation. It is expected to take at least several months to reach an agreement on workforce reallocation.

Last year, Hyundai produced 160,000 units of the Kappa engine annually at its Ulsan plant. Production of the Kappa engine for compact cars will be halted within this year, and export production is being considered for transfer to its affiliate Hyundai Wia. However, in emerging markets with high demand for the Kappa engine, local production will continue at plants in India, Brazil, and other locations.

The Kappa engine is divided into 1.0ℓ for compact cars, 1.4ℓ for export, and 1.6ℓ for hybrids. It has been mainly applied to compact cars such as Casper, Morning, and Ray, as well as small sedans like Accent and Rio. It is also used as the gasoline engine for small HEV (Hybrid Electric Vehicle) SUVs such as Kona, Avante, and Niro hybrids.

Domestic production began in 2012 and has continued for 12 years this year. Hyundai established a production facility at the Ulsan plant with an annual capacity of 200,000 units, but current volume has decreased to around 160,000 units. Recently, as Hyundai has increased investment in electrification domestically, the movement to relocate internal combustion engine and parts production to overseas factories or affiliates, known as 'de-internal combustion engine,' has become more pronounced.

Small engines are still produced overseas. In 2022, Hyundai established an engine plant in Brazil and transferred some of the Kappa engine volume, which was previously exported from the Ulsan plant in a local assembly (CKD) form, to the Brazilian plant. Earlier, in 2008, Hyundai opened a dedicated Kappa engine plant in India with an annual production capacity of 250,000 units simultaneously with the launch of the Kappa engine. The India-produced Kappa engines have been installed not only in local models such as the i10 and i20 but also in small cars sold in Europe (i30) through exports.