South Korean Hyundai to invest $607 million in Turkey
Hyundai to invest $607 mln, double its production in Turkey
Economy Minister Zafer Çağlayan attended the ceremony where South Korean car-maker Hyundai introduced the new İ20 model.
South Korean car maker Hyundai announced Thursday that it will invest $607 million in order to double its annual production capacity in Turkey from 100,000 vehicles to 200,000.CEO Ali Kibar of Kibar Holding, a partner of Hyundai Assan in Turkey, made the announcement at a ceremony held at his company’s İzmit plant, where the production of its i20 car model was introduced.
He said the recently announced government incentives package had a major impact on the automaker’s decision to invest. He informed attendees that the total investment of $607 million is made up of contributions by Hyundai in the amount of $382 million, Turkish sub-industrialists in the amount of $121 million and four South Korean sub-industry firms in the amount of $104 million.
Kibar said: “We plan to conclude all steps in the process within a period of 18 months and an additional 750 workers will be employed by the plant. Following the investment, the Hyundai factory will procure 67 percent of its input domestically and export most of its products to Europe.
Kibar underlined that the possible free trade agreement between South Korea and Turkey currently on the agendas of both countries would hasten the speed of the investment, bringing attention to the fact that there is a current tariff of 15 percent on parts imported from countries such as South Korea. He stated. “We pay an extra $2,250 on every purchase of $15,000. Additionally, the private consumption tax [ÖTV] — higher taxes imposed by the government on certain goods such as cars, mobile phones, tobacco and alcoholic beverages — in Turkey on cars creates unfair competition.”
Hyundai Assan CEO Won-Shin Chang said the company has produced more than 700,000 vehicles since it began production in Turkey 15 years ago and has generated export revenues of more than $4 billion. Chang highlighted the i20 production as the most important feature of the plant and that by producing 70,000 cars annually profits earned each year will be about $1 billion.
Economy Minister Zafer Çağlayan, who was also present at the ceremony, emphasized that the automotive sector is one of the strategic areas targeted by incentives. He added that 5 percent of the Hyundai investment will be reimbursed by the government.
The giant auto-making giant, known as Hyundai Assan Otomotiv Sanayi (HAOS) in Turkey, expected to create 2,400 new employment opportunities, including the involvement of sub-industry firms, when it opened. The investment aims to increase production of the Hyundai i20 in Turkey to 120,000. Hyundai Assan plans to export 94 percent of its finished automobiles to European countries and other countries that have free trade agreements with Turkey. With the beginning of increased production in 2014, annual revenue is expected to amount to $2 billion. The increase in annual production is intended to fulfill the growing demand from Europe and Turkey for Hyundai’s A and B segment models.
Hyundai Motor Company, which has six manufacturing bases outside of South Korea, in the US, China, India, Russia, Turkey and the Czech Republic, sold 4.06 million vehicles globally in 2011. The company employs over 80,000 workers worldwide and offers a full line-up of vehicles, including small to large passenger vehicles, SUVs and commercial vehicles.
SOURCE: TODAYS ZAMAN