Hyundai To Launch Czech Factory

Move seen as a play to capture more of the European market

The head of Hyundai Motor, Chung Mong-Koo, is to launch construction of the company's first European production plant in the Czech Republic on April 25. For Hyundai, the world's sixth-biggest car producer, the plant in the far eastern town of Nosovice, signals a fresh assault on the vast European car market.

The company, trying to shake off domestic troubles and the threat of stepped up competition from industry newcomers, such as China, is investing 1.0 billion euros (US$1.36 billion), the biggest such investment ever in the former Communist Central European country. The project hit a period of uncertainty owing to a slush fund corruption scandal for which Chung now faces a three-year prison sentence.

Hyundia will produce its new i30 family hatchback at Nosovice. The Czech plant will later produce an MPV car-van hybrid.

Sister company, Kia, has already launched production in neighboring Slovakia with close cooperation planned between the factories which are 38 miles apart.

The investment confirms the Czech Republic as the foremost regional, and a leading European, carmaker. Skoda Auto, part of the Volkswagen Group, and the Toyota Peugeot Citroen (TPCA) joint venture together manufactured just under 849,000 cars in the Czech Republic last year. The South Korean newcomer will produce 200,000 cars from 2009, rising to 300,000 when it reaches full production in 2011. That eventual total would put Czech production on an equal footing with Italy's 1.21 million output last year and boost the industry's position as the driving force in the booming Czech economy.

More than 30,000 workers are directly employed by two existing manufacturers and over 100,000 more by subcontractors and suppliers, according to the local auto industry association.

Copyright Agence France-Presse, 2007

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