Hyundai Motor Co. and Kia Corp. will participate in Indonesia’s largest auto show next week as the South Korean sister firms are ramping up their offensive to crack the Japanese dominance in Southeast Asia – one of the world’s fastest-growing markets.
The Korean duo will set up exhibition booths, the largest among participants, at the Gaikindo Indonesia International Auto Show (GIIAS) to be held in Tangerang, a city in the province of Banten, for 10 days from Aug. 10.
More than 200 carmakers, including Toyota, Honda, BMW, Mercedes-Benz, Volkswagen and Volvo as well as auto parts makers are slated to take part in the motor show.
Hyundai and Kia, which have participated in the GIIAS since 2021, will showcase their latest models and new concept vehicles there.
Last year, Hyundai Motor unveiled the Stargazer, a new small multi-purpose vehicle (MPV) strategically designed for the Indonesian market, at the GIIAS.
In 2021, the Korean carmaker showcased the Creta, a subcompact crossover utility vehicle produced at its Indonesian plant, at the show.
At this year’s event, Hyundai is expected to premiere the Stargazer X, the high-performance version of the model, industry sources said.
The world’s fourth most populous country with 270 million people, Indonesia accounts for more than a third of car sales in the Association of Southeast Asian Nations (ASEAN) market.
THE ONLY AUTO SHOW HYUNDAI IS INTERESTED
The GIIAS will likely be the only international auto show the two Korean carmakers are interested for this year – highlighting the strategic importance Hyundai and Kia place on the Indonesian and Southeast Asian markets.
Absent from last October’s Paris Motor Show, the Korean duo is also said to be skipping this year’s IAA Mobility Germany and the Detroit Auto Show.
In recent years, Hyundai has ramped up its Indonesian business to crack the Indonesian market dominated by Japanese carmakers such as Toyota and Honda, which have long reigned as undisputed champions with their names on nine of every 10 passenger cars sold there.
Hyundai plans to challenge its rivals with its flagship EV crossover, the IONIQ 5, which is catching on among young drivers in the region.
Hyundai mounted an offensive against rivals with the kickoff of its Indonesian manufacturing plant last year.
In May of last year, the company began mass producing its iconic IONIQ 5 at its newly built plant in the Deltamas industrial complex in Bekasi Regency, about 40 km east of Jakarta.
Hyundai said at the time it would spend $1.55 billion to increase its annual production capacity to 150,000 units by the end of 2022, and further expand to 250,000 cars in the long run.
EXPANDING PRESENCE IN INDONESIA
Hyundai and Kia saw their combined vehicle sales rise sixfold to 19,072 units in the first half of this year from 2,990 units two years ago. The duo ranked sixth with a 3.7% market share at the end of June, up from 13th with a share of 0.8% at the end of June 2021.
Still, Hyundai and Kia have some catching up to do in Indonesia. Japanese carmakers, including Toyota, Daihatsu Motor, Mitsubishi Motors and Honda, are all ahead of them in rankings.
“We plan to launch two new EVs in Indonesia next year to take on our rivals,” said Lee Young-taek, head of Hyundai’s Asia-Pacific region business.
Indonesia also has ample mineral resources such as nickel and cobalt, key raw materials for EV battery production. The country is the world’s top nickel producer with the largest reserves.
To secure a stable supply of battery cells, Hyundai has forged a partnership with LG Energy Solution Ltd. to build a $1.1 billion battery plant in Karawang, Indonesia.
Construction of the plant is expected to be completed by the end of this year. The factory will begin commercial production in the first half of 2024 with an annual capacity of 10 GWh of battery cells, enough for over 150,000 EVs.
The Indonesian government has been offering generous tax incentives for global automakers to expand the country’s EV penetration rates, with at least one in five vehicles running on its roads to be electric by 2025.
Write to Nan-Sae Bin and Il-Gue Kim at binthere@hankyung.com
In-Soo Nam edited this article.
