You’d think that a new plant in Indonesia would severely affect the production of locally-assembled cars here, wouldn’t you? But Hyundai is set to do things differently, despite also planning to move its regional headquarters from Mutiara Damansara to Jakarta by the end of 2021.

According to a report by The Edge Markets, Sime Darby Motors expects the volume of Hyundai models being assembled at its Inokom plant in Kulim, Kedah to actually increase as part of the move. This is due to the tax savings brought on by sourcing the CKD kits from Indonesia instead of South Korea. The company owns Hyundai-Sime Darby Motors (HSDM), Hyundai’s official distributor and importer in Malaysia.

A Sime Darby Motors spokesperson outlined HSDM’s plans for the next two years, which include imported CBU models this year and CKD SUVs the next. “HSDM has plans to introduce several fully imported models to the Malaysian market in 2021, followed by locally-assembled SUV models in 2022. These award-winning models are highly anticipated models with great success in sales volume during their recent global launches.

“Meanwhile, our Hyundai assembly operation aims to continue assembling Hyundai models for the domestic market. In fact, with Hyundai’s new plant in Indonesia expected to produce right-hand drive assembly kits, which brings added value through tax savings for sales of vehicles, we look forward to increasing our assembly volume for Hyundai vehicles at Inokom,” the spokesperson said.

Hyundai’s completely knocked-down kits are currently from Korea and are subject to tariffs of between five percent and 80%. Indonesia-sourced kits won’t be saddled with those taxes thanks to the ASEAN Free Trade Agreement (AFTA).

The spokesperson said that HSDM will be introducing “more interesting” products to Malaysia starting this year, building on the launch of the Kona SUV and the Elantra and Sonata sedans in 2020. It will also be planning the local assembly of new models in Kulim, which currently produces the Santa Fe. The company sold 1,400 vehicles in 2020, down 37.9% compared to the 2,256 units that left dealer lots in 2019.

Hyundai’s new plant in Bekasi, Jakarta is the company’s first to be built in Southeast Asia, costing the carmaker US$1.55 billion (RM6.2 billion). Announced in November 2019, it will begin production in the second half of the year, with an initial capacity of 150,000 units; around half of those will be exported to other markets. The factory will eventually be expanded to produce 250,000 vehicles a year.

This development will be a shot in the arm for Hyundai Motor Group’s fortunes in the region. In 2019, it sold 184,595 Hyundai and Kia vehicles in Southeast Asia, far below the combined total of 2.63 million units racked up by Japanese brands.

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