Following the news that Hyundai Motor has today (26^th November 2019) signed a memorandum of understanding (MOU) with the Indonesian Government to build a vehicle manufacturing plant near Jakarta;

David Leggett, Automotive Editor at GlobalData, a leading data and analytics company, offers his view:

“With a population of 267 million, Indonesia has huge potential for car demand growth and its vehicle market already exceeds one million units a year – some 1.15 million light vehicles (LVs) were sold there in 2018.

“The planned investment would be Hyundai’s first car plant in southeast Asia, a region long dominated by Japanese carmakers. The company sees an opportunity to establish greater market presence in a region with good long-term demand prospects, reducing its reliance on the US and China – the world’s two largest vehicle markets, which have become much less reliable as sources of volume growth and profits.

“The move by Hyundai to start manufacturing vehicles in Indonesia in 2021 also reflects the country’s clear advantages as a low-cost manufacturing hub for exports to other Southeast Asia markets such as Thailand, Malaysia, Vietnam and Singapore.

“Hyundai says it is also currently exploring the production of electric vehicles (EVs) specific to Association of Southeast Asian Nations (ASEAN) in its Indonesian plant. That could turn out to be a vital component as Hyundai, together with sister company Kia, aims to make Hyundai Motor Group the world’s third-biggest EV manufacturer in the world by 2025.”