Hyundai Motor Increases Contract Manufacturing Plants in Malaysia

Hyundai Motor Company has decided to increase its contract manufacturing plants for semi-knocked down (CKD) products in Malaysia. This move aims to boost sales not only in the local market but also in neighboring Southeast Asian countries. Hyundai views the ASEAN region as an emerging market and has recently increased its investments.

According to the company's explanation on the 26th, Hyundai plans to invest a total of 2.159 billion ringgit (479 million dollars, approximately 670 billion won) from next year until 2030 to expand its existing contract manufacturing plants. The company, together with its local partner Inokom, currently produces Hyundai SUVs and Kia multipurpose vehicles (MPVs) such as the Carnival in Malaysia. The process involves sending semi-knocked down bodies or modules from Korea to be finally assembled and sold locally.

Semi-assembled product assembly plant of Inokom under Malaysia's Sime Motors. Sime Motors website

This investment will expand the existing Inokom plant, with plans to start producing the MPV Staria from mid-next year. Production will begin at 20,000 units annually and gradually increase. Hyundai also plans to expand its product lineup to include Hyundai and the premium Genesis brand’s mid-to-large SUVs and MPVs.

Hyundai explained, "Contract manufacturing will initially focus on internal combustion engine and hybrid models, and later expand to electric vehicle contract manufacturing in line with local eco-friendly policies." To increase electric vehicle sales, the company will build charging infrastructure and also establish battery production facilities.

The locally manufactured contract vehicles will be sold domestically as well as exported to neighboring Southeast Asian countries. The company aims to export about 30% of the production. The company stated, "Considering the growing importance of Southeast Asia and Malaysia, we decided to invest," adding, "We will contribute to regional economic and social development through job creation and local workforce development."

The ASEAN market is seen by Hyundai as a high-potential growth market due to its large population and relatively slow vehicle penetration so far. Japanese automakers, which entered early in major Southeast Asian countries such as Indonesia and Thailand, hold a high market share. Hyundai has built contract manufacturing plants in cooperation with local companies in various countries including Vietnam, and has directly established complete vehicle plants in Singapore and Indonesia to increase local sales.