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Hyundai Motor to Put $1.15 Billion in First Indonesia Car Factory

South Korea’s Hyundai Motor stated Tuesday it has inked a preliminary agreement to build a brand new manufacturing unit in Indonesia, which would be its first car unit in Southeast Asia and a crack at Japanese rivals that dominate the sector.

The deal comes as Hyundai and affiliate Kia Motors struggle with a prolonged sales downturn in China, where they suspended two factories this year.

Hyundai Motor mentioned it’s going to invest about $1.55 billion in the Indonesia auto manufacturing plant from now until 2030, along with product development and operation costs.

The power, to be constructed in the metropolis of Bekasi, east of Jakarta, will begin manufacturing in late 2021, with an annual strength of 150,000 automobiles and a plan to grow that to 250,000 autos a year, Hyundai mentioned.

Hyundai plans to make small sport utility vehicles (SUVs) and multi-purpose vehicles (MPVs), whereas electric vehicles (EVs) tailored to the Southeast Asian market are into consideration.

Hyundai stated it’s constructing the manufacturing facilities to avoid import tariffs starting from 5% to 80% in the Association of South East Asian Nations region. The factory will cater to Indonesia, the area’s biggest car market, and different nations belonging to the Association of Southeast Asian Nations, it stated.

The factory will allow the auto manufacturer to secure future growth to assist it “in combating slowing demand in the international automotive market”, Hyundai mentioned in its statement.

The deal was signed at an event attended by Indonesian President Joko Widodo and Hyundai Motor Executive VC Euisun Chung.

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