Industry Trend Analysis - Hyundai's CV Production Plans Face Strong Competition - NOV 2017

BMI View : Hyundai ' s plans to set up a CV production base in Indonesia will allow it to compete more price competitively in the local market but will face strong competition from the dominance of Japanese automakers. Robust CV demand across the ASEAN region will , therefore , provide a sales outlet from a challenging domestic market for the company ' s locally produced vehicles.

In August, South Korean automaker Hyundai Motor Co. announced plans aimed at setting up a commercial vehicle (CV) production base in Indonesia, which would target the Indonesian and Southeast Asian markets. Hyundai is expected to establish a 50-50 joint venture with a local company, with the goal of beginning local production in the second half of 2018. The new factory will have a production capacity of 1,000 units a year with this expanding according to demand in the future.

With this announcement by Hyundai not specifying what kind of CVs (light CVs or heavy trucks) the company will seek to produce, we are holding off on revising our CV production forecasts for Indonesia. We currently forecast total CV production in Indonesia to grow at an annual average rate of 4.0% over 2017-2021. Breaking this down, we forecast LCV production to grow at an annual average rate of 2.6% over 2017-2021, while heavy truck production averages annual growth of 7.3% over the same period.

Production Starting To Recover
Indonesia - Commercial Vehicle Production By Segment, Units
f = BMI forecast. Source: Gaikindo, BMI

This article is part of our Asia coverage. To access this article subscribe now or sign up for free trial