Hyundai Motor Company has begun targeting the ASEAN (Association of Southeast Asian Nations) region, which has emerged as a blue ocean in the automobile market. This is because the Indonesian manufacturing corporation (HMMI), which has the highest operating rate among overseas production corporations, is at the forefront. Hyundai Motor Company plans to establish a value chain in Indonesia from battery cell production to finished car sales and increase its grip on the ASEAN market.
Hyundai Motor Company announced on the 1st that it will locally produce and sell the new Kona Electric (EV), an electric vehicle equipped with batteries produced locally in Indonesia. Kona Electric is equipped with batteries made by HLI Green Power, a joint battery cell factory in Indonesia between Hyundai Motor Group and LG Energy Solutions.
Among automakers operating in Indonesia, Hyundai Motor Company is the first to have a local production and sales system ranging from electric vehicle battery cells to finished vehicles.
Having an electric vehicle value chain in the local market will reduce costs and increase work efficiency. This is because logistics costs can be reduced and the battery supply period can be shortened.
The ASEAN region is attracting attention as a blue ocean in the automobile market due to its large population and low average age. According to the ASEAN Official Portal, as of 2022, the total population of 10 ASEAN countries (Indonesia, Malaysia, Thailand, Philippines, Vietnam, Singapore, Myanmar, Cambodia, Laos, and Brunei) is 67170. The population is expected to exceed 800 million in 2050.
The average age is 30, which is interpreted as a young and dynamic market. As the working-age population continues to increase and the consumer market grows, demand for automobiles is also rapidly increasing. Cars with reasonable prices and practical sizes are preferred, especially by the younger generation.
According to the ASEAN Automobile Federation, the size of the ASEAN automobile market last year reached 3,355,136 units. Among these, the country with the highest sales share was Indonesia (29.9%). The markets were then formed in that order: Malaysia (23.9%), Thailand (23.1%), Philippines (12.8%), Vietnam (9.0%), Singapore (1.1%), and Myanmar (0.1%).
The ASEAN market has been monopolized by Japanese automobile manufacturers. As of 2022, the number one selling brand in Indonesia was Toyota. Up to seventh place was occupied by Japanese brands or brands of joint ventures with Japanese automakers. Hyundai Motors remained in 8th place.
However, Hyundai Motors surpassed some Japanese companies last year and rose to sixth place. Last year, it sold 7,475 electric vehicles, ranking first in Indonesia's electric vehicle market share (43.8%). However, this year, competition is fierce as Chinese companies are intensifying their pursuit.
The production performance of HMMI, the first Hyundai Motor Group automobile factory in ASEAN completed in September 2022, is also encouraging. In the first quarter of last year, HMMI production capacity was 23,000 units and production performance was 22,520 units. It exceeded production capacity and recorded an operation rate of 110.9%. This is the highest figure among overseas factories excluding Korean factories (114.9%).
Currently, HMMI is producing local specialized strategic vehicles such as the Creta, multi-purpose vehicle (MPV) Stargazer, mid-size sports utility vehicle (SUV) Santa Fe, and electric vehicle IONIQ 5.
An official from Hyundai Motors explained, “We are also raising expectations in that we can give the image of ‘Hyundai Motors as a localized vehicle’ while establishing an Indonesian production value chain in the mid to long term.”
Reporter Sujeong Moon thursday@kmib.co.kr
