Hyundai to boost China output by 60% over 3 years

Hyundai Motor Co. plans to increase manufacturing capacity in China by 60% over the next three years, reflecting its high confidence that the world's largest auto market by unit sales will continue rapid growth, a senior executive said.

Hyundai's plans include a fifth plant in China, scheduled to open by 2012, Noh Jae-man, president of Hyundai's joint-venture with Beijing Automotive Industry Holding Co., said in an interview Monday.

Hyundai, which has seen rapid growth in sales of its Hyundai- and Kia-brand vehicles in China, also plans to increase manufacturing capacity at its four existing plants in China by 20% next year to a combined 940,000 vehicles annually.

The new plant will be capable of producing 300,000 vehicles a year and should boost overall capability to 1.24 million cars when it is completed, he said.

Even as they have scaled back in many of their home markets, international auto makers are racing to expand production in China. Helped by government stimulus measures, vehicle sales in China have grown about 40% so far in 2009, and are likely to exceed 13 million vehicles for the full year, surpassing the U.S. as the world's largest auto market.

Although growth is expected to slow in 2010, many auto executives feel the Chinese market has years of significant expansion left, given that its rates of car ownership remain low.

Mr. Noh said China is on the verge of the type of "full-fledged motorization" of society that Japan experienced in the 1970s and the 1980s and that Hyundai's home country of South Korea underwent roughly a decade later.

"We need more capacity," Mr. Noh said. "Every auto maker [operating in China] needs more plants."