[Reporter’s Notebook] How Hyundai Motor Company Is Capturing the Middle East

Saudi Arabia Aims to Become a Mobility Powerhouse
Hyundai Faces Test in Localizing Its Brand

King Abdullah Economic City (KAEC), Saudi Arabia, Hyundai Motor Company Saudi Production Corporation (HMMME) site. Photo by Oh Hyungil

If you drive just over an hour from Jeddah, Saudi Arabia's second-largest city, you will arrive at King Abdullah Economic City (KAEC) on the coast of the Red Sea. Planned in 2005 as part of Saudi Arabia's efforts to reduce its dependence on oil, this vast city is being built in the middle of the desert on a 185-square-kilometer site?about one-third the size of Seoul. The city is set to include an airport, a port, manufacturing plants, a university, and residential facilities.

Twenty years later, this area has emerged as a key pillar for the realization of Crown Prince Mohammed bin Salman's national reform initiative, "Vision 2030." In April 2016, the then-just-over-30-year-old crown prince declared his intention to create a "post-oil" Saudi Arabia, and his words are now becoming reality.

The mobility industry is a symbolic sector within "Vision 2030." Lucid, an electric vehicle company in which the Public Investment Fund (PIF) holds a 60% stake, opened its first factory in KAEC last year. The company is producing the luxury electric sedan "Air" and will add the mid-size SUV "Earth" to its production line starting next year. Ceer, a brand that Saudi Arabia is nurturing as its own, is developing proprietary models using technology acquired from BMW and is scheduled to begin production in KAEC next year.

Saudi Arabia, which has so far been an importer of automobiles, is now preparing to leap forward as a mobility powerhouse in the Middle East. At this juncture, Hyundai Motor Company has also entered the scene. In partnership with PIF, Hyundai has broken ground on the Middle East's first production base, aiming to begin operations in the second half of next year. However, the real challenge starts now. There is a long way to go in building a parts supply chain and training skilled personnel to be deployed on-site in a country with virtually no manufacturing base. So why did Hyundai decide to shift its strategy from export-oriented operations to local production?

The answer can be glimpsed in last week's Middle East tour by U.S. President Donald Trump. For his first overseas trip of his second term, President Trump chose three Middle Eastern countries. He praised Crown Prince bin Salman, saying, "There are great partners in the world, but no one is as strong as this gentleman."

As a result, strategic economic partnership agreements were signed in areas such as AI data centers and defense, totaling 850 trillion won (600 billion dollars). This demonstrates Saudi Arabia's formidable presence. The country, once known only for "oil money," has now become an economic partner that the world is eager to collaborate with.

There is an old Arabic proverb: "One hand washes the other, and both hands wash the face." Relationships cannot be one-sided. If only one side seeks to benefit, the relationship cannot last. If Hyundai Motor Company sincerely contributes to Saudi Arabia and supports its vision, it will be accepted as a "local brand."