Brazil’s National Bank for Economic and Social Development (BNDES) has cleared a US$180m finance package for the new Hyundai plant in Piracicaba, 95 miles northwest of São Paulo.
This is about a third of the initial cost of the 150,000 units a year factory due to open in November. Hyundai Motor will finance the rest itself.
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Hyundai has designed new compact hatchback and saloon models from scratch specifically for emerging markets and these will be built in the new Brazilian plant. A compact SUV derivative is also planned. No model names have been announced to date.
Separately, existing Hyundai importer, assembler and distributor, Group CAOA, has announced it will started building the ix35 SUV at its Anápolis, Goiás state plant, 88 miles southwest of Brasília, by the end of the year, replacing the previous generation Tucson still in assembly here. This independent investment is entirely Group CAOA’s.
Now Hyundai is setting up its own factory, Group CAOA’s future role selling Hyundai vehicles in Brazil is unclear. It currently imports or assembles all models and owns about 70% of the dealer network.
CAOA previously imported and distributed Renault here and the ending of that relationship was finally determined in court. It is known that the time-consuming action cost the French automaker a huge amount of money though the actual cost was never revealed.
Current industry rumours suggest affiliate Kia might have vehicles assembled by parent Hyundai Motor in its new Piracicaba plant. Joint Hyundai/Kia assembly [most platforms are shared – ed] would be new here in Brazil [but has been done in Europe when the Czech Hyundai plant and Slovak Kia factory for a time built each other’s models – ed]. Otherwise, the two brands, as they have expanded outside South Korea, have usually been built in separate plants [such as in the US where Hyundai has a plant in Alabama and Kia’s is in neighbouring Georgia – ed].
The Brazilian government has created incentives to encourage local production. Kia distributor Group Gandini currently depends almost entirely on fully imported models with only low volume Bongo light commercial vehicle assembly done in Uruguay.
But this business model will alter due to the excessive vulnerability to changing rules, especially here in Brazil, and other factors such as exchange rates.
