Hyundai Motor announces $3bn US investment

SeongJoon Cho | Bloomberg | Getty Images

An employee works on a ship under construction in the dry dock at the Hyundai Heavy Industries shipyard in Ulsan, South Korea.

Hyundai Motor, South Korea's largest carmaker, says it will increase its investment in the US by 50 per cent over the next five years, to $3.1bn, as it seeks to capitalize on pledges by President-elect Donald Trump to boost the American economy.

The announcement comes just three days before the swearing-in of Mr Trump, who has threatened to slap hefty taxes on Mexican-built vehiclesIMPORTED into the US.

Hyundai denied that the investment was a response to an intensifying Twitter assault by Mr Trump on global automakers for producing cars and investing in Mexico rather than in the US, but rather a reflection of the importance of the US market.

"We expect a boost in the US economy and increased demand for various models as president-elect Trump follows through on his promise to create 1m jobs in five years," Chung Jin-haeng, president of Hyundai Motor, told reporters in Seoul on Tuesday.

The company, and its affiliate Kia Motors — which together rank as the world's fifth-largest carmaker by sales — join a growing list of automakers to announce investments in the US in recent weeks.

Earlier this month, Japanese car group Toyota announced it would sink $10bn into the US market. That came hot on theHEELS of an announcement by Ford that it would cancel a planned $1.6bn plant in Mexico and instead build the facility in Michigan.

Almost all car plants in Mexico are dependent on sales to the US with 60 per cent of the country's entire car output ending up in the US market.

Hyundai said that between 30 per cent and 40 per cent of the planned investment would be devoted to R&D and, in particular, to developing self-driving and eco-friendly technologies. Some money would also be spent on upgrading and retooling existing facilities in Alabama and Georgia, it added. 

Mr Chung said the company may consider building anotherFACTORY in the US, as well as producing its luxury Genesis vehicles there.

Hyundai has been trying to boost sales in the world's most profitable auto market, where its market share has held stubbornly at around 4.5 per cent. Its US sales including Genesis models rose 5 per cent last year to a record 761,710 units, but that was far shy of the double-digit growth it enjoyed in 2010/11.

In September, Kia opened a new facility in the Mexican state of Nuevo Leon, boosting its global manufacturing capacity by 400,000 to 3.55m vehicles. Some 80 per cent of the vehicles built at the plant are destined forEXPORT.

On Tuesday, the car company said it had no further plans to increase its presence in Mexico, although Mr Chung said the existing facility was a "source of worry".