South Korean carmaker Hyundai is now set to establish its first-ever manufacturing facility in Indonesia as part of its larger plan to further penetrate the South East Asian market. The company announced late last week that it had already signed a memorandum of understanding with the Indonesian government for its planned manufacturing facility to be located in Kota Detamas just east of the city of Jakarta.
Hyundai's new manufacturing facility in Indonesia is estimated to cost the company around $1.55 billion. The estimated investment will include construction, new product development, and operating costs until 2030. The South Korean company announced that it will be breaking ground on the location of the manufacturing facility this month.
The new manufacturing facility is expected to go into partial operation in the second half of 2021, with an estimated initial production capacity of 150,000 vehicles per year. When it goes into full operation, the facility is expected to churn out up to 250,000 vehicles per year.
Hyundai announced that its new Indonesian factory should create more than 23,000 new job opportunities for residents. Over the next decade, Hyundai estimates that it should be able to inject around $20 billion into Indonesia's economy.
The new Kota Detamas factory will be producing different models of sports utility vehicles (SUVs), compact multi-purpose vehicles (MPVs), and sedans for the company's Asian markets. Hyundai also announced plans to use the new facility with its "innovative differentiation" strategy, which will involve deep collaboration with Indonesian institutions and government agencies to produce vehicles specific to the market.
The strategy will also include an innovative "build-to-order" scheme, where customers can specify the features they want on their vehicles before delivery. This strategy is expected to significantly lower inventory costs for both the company and its distributors. As part of this feature, Hyundai is taking advantage of the increased online use in the region by establishing its own online and mobile-accessible retail system for both sellers and customers. This will then be eventually expanded to include different connectivity services such as vehicle control, in-vehicle shopping and entertainment, and on-demand assistance.
Hyundai also announced that it is exploring the possibility of producing an ASEAN-exclusive fully-electric model at the Indonesian facility. Similar to other major car manufacturers, Hyundai has set its own electrification goals to ensure its sustainability in the coming years. The company previously announced that its mission is to become the world's third-biggest electric vehicle manufacturer by 2025, along with its sister company Kia Motors.
