Hyundai Motor will set up a $US1.24 billion commercial vehicle joint venture with China’s Guangzhou Auto Group, Reuters reported.
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But some analysts reportedly raised eyebrows, saying Hyundai’s move came as Chinese consumer demand was wilting – they questioned Hyundai’s ability to build engines for commercial vehicles, its weakest spot in their view.
“Hyundai’s move appears to be to try to take early control over the relatively untapped market in China,” Kim Hak-joo, a Samsung Securities analyst, told the news agency.
“It has had remarkable success in the passenger car segment where its models are hugely price competitive. But in the commercial vehicle segment, it lacks engine technology and, without quality, it will be very hard to compete.”
Hyundai reportedly said in a statement the 50-50 joint venture with Guangzhou Auto, which is also the Chinese partner of Toyota Motor Corp. and Honda Motor Co., was intended to meet explosive demand for commercial vehicles.
The venture in south China will receive an initial investment of $430 million, with plans to boost output to 200,000 units in 2011 after mass production begins in 2007, Hyundai said, according to Reuters.
