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Hyundai To Build Two Plants In China To Compete With World’s Largest Automakers

Jan 02, 2015 07:54 PM EST | By Jane Galvez

Hyundai announced Tuesday their plans to build two production plants in China, the biggest car market in the world, to better compete with other large automakers.

It’s the South Korean automaker’s first new manufacturing plant since its last one in 2012 and its first overseas expansion in three years. The plants will be constructed in the northeastern Hebei province and southwestern city of Chongqing, to be started in 2016 and 2017, respectively.

Construction of the Hebei plant will begin on the second part of 2015 and will start production in the middle 2016. It’s expected to reach full production by 2018.

Though the company declines to give a comment on how much the plants would cost, it’s estimated that the plants are capable of producing 300,000 vehicles.

The South Korean automaker also considers building another one in the U.S. as its plants in Alabama and Georgia already ran its full course in 2013.

In a statement, Hyundai said, “The new factories will lay the groundwork for us to better compete with such rivals as Volkswagen and GM for the top spot in China.”

Compared to other large car manufacturers, Hyundai lags behind in expansion. General Motors also plans to build more plants in the region by investing $12 billion by 2017. Volkswagen, on the other hand, opened a plant in China in 2013 and plans to invest more by 2018.

Hyundai’s affiliate KIA motors also plans to increase car production by 2016 in its Jiangsu factories from 300,000 to 450,000 vehicles. Combined, the two companies estimate that they can produce 2.7 million automobiles by 2018.

In 2012, Hyundai Motor Group CEO suspended rapid expansion in worry of tracing the quality problems that plagued Japanese car manufacturer Toyota Motors after its aggressive growth in the 2000s.

Together, Hyundai and KIA are the world’s fifth largest auto-maker. In China, they have growing competition with Japan’s Toyota and Nissan Motors recovering from the backlash caused by the territorial dispute in 2012.

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