Hyundai to spend $1.8 billion for commercial vehicle offensive

Article by Christian A., on February 21, 2015

Hyundai Motor Co. is planning to invest around $1.8 billion by the end of the decade to finance a major offensive in commercial vehicles as it bids to keep up with advancing rivals in the world stage. Hyundai is expecting a global commercial vehicle market surging nearly 30 percent in each of the next five years.

Last year, the South Korean carmaker sales dropped in its home turf, in China and other markets. According to Hyundai, it will earmark KRW400 billion ($363.13 million) to increase output of vans, trucks and buses in South Korea by 2020, and has allocated KRW1.6 trillion for research and development in such vehicles through the five-year period.

Hyundai said in a statement that it has plans to roll out "premium models in North America and Europe." The carmaker saw its overall market share in the United States drop in 2014, partly because it offers few pickup trucks and sport utility vehicles, which demand surged further as oil prices dropped. Analysts have remarked that for Hyundai to introduce commercial vehicles in the US and challenge established carmakers will take considerable time.

Suh Sung-moon, an analyst at Korea Investment & Securities, remarked that Hyundai and Kia need to “bolster their weak” commercial vehicle business to reach an annual production capacity of 10 million vehicles.

Hyundai commenced building heavy-duty trucks like the Trago in China in 2014 for the local buyers and would begin production of H350 light commercial vehicles in Turkey next month for Western Europe.

The carmaker recently disclosed that it is planning to hike annual production capacity at its Jeonju site by 54 percent to 100,000 commercial vehicles by the end of the decade, from the current 65,000.

Hyundai Motor Group announced in January plans to spend $73 billion over four years after the South Korean government called for conglomerates to spend more to help revive its biggest economy.

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