BRAZIL [updated 17:00GMT]: Hyundai confirms local factory

By just-auto.com editorial team | 1 December 2008

Hyundai has confirmed it will build a new car plant here in Brazil.

During a visit to the country, the automaker's quality chief Byung-Kee Suh and COO Jin-Haeng Chung confirmed the automaker would build a new plant in Piracicaba, São Paulo state.

The first model for Brazilian assembly is yet to be announced but probably will be the i20 hatchback line launched at the Paris motor show in October, replacing the Getz. Production is already well under way in India, from which exports began recently.

Brazilian i20 assembly will begin early in 2011 - Hyundai has not altered its plans despite the recent sales slump which has led to temporary plant closures throughout the local auto industry.

The US$700m plant - funded by the automaker itself rather than its local distributor - will have initial capacity of 100,000 units. It will supplement an existing factory in Anápolis, Goiás state, owned by local Hyundai Motor (and Subaru) importer and distributor Grupo Caoa, where the HR light truck is assembled from CKD kits. Caoa also plans to assemble the Tucson small SUV from mid-2009.

Grupo Caoa president Carlos Alberto Oliveira Andrade told just-auto that "models with greater added value and lower production will remain in Anápolis". He added that no Kia model would ever be made in Piracicaba.

Now-defunct Asia Motors (a Kia subsidiary before it became a Hyundai Motor affiliate) and its then Brazilian partner imported vehicles tax-free on the understanding an assembly plant would be built in Bahia (where Ford is today) but that was never built. The Brazilian government wants Hyundai to inherit the debt but some compromise agreement is likely eventually.

Current Kia importer Grupo Gandini has, in any case, announced plans to assemble at least one model locally, also from CKD kits - it has mentioned the newly-launched Soul line.

Though the company has already purchased a former warehouse facility in Salto, São Paulo state, it is currently re-considering the required investment due to recent changes in the value of the dollar versus the Brazilian real which could now render local assembly unviable.

Fernando Calmon