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Kia Motors, owned by South Korea's biggest automaker Hyundai Motor, said that it will push ahead with its aggressive expansion plans in China, although car sales growth in the nation is slowing sharply.
"Our investment and production capacity plans in China will remain unchanged, despite plunges in local car sales growth," said Lee Hyoung-keun, the newly-appointed chief executive officer of Kia's joint venture in eastern Jiangsu Province.
Kia and partners Dongfeng Motor Corp and Yueda Group plan to quintuple investment in the joint venture to US$648 million and nearly quadruple its annual production capacity to 400,000 cars by 2008, a former senior executive of the venture told China Daily.
"As well as other automakers in China this year, we are facing great difficulties because of the overall market slowdown. However, we will hold our ground with the launch of many new competitive products and the market is expected to rebound in 2007," Lee said.
Lee said that the joint venture has lowered its sales target this year to 65,000 cars from 80,000 units.
The venture sold 50,000 cars last year, almost double that in 2002.
The venture now produces Qianlima and Optima sedans and Carnival multi-purpose vehicles.
Kia will start to produce 1.6-and-1.8-litre Cerato sedans at the joint venture during the second half of next year, Lee said.
The venture is also considering launching a sports utility vehicle (SUV), he said, declining to reveal the specific model and timetable.
"We will wait and see the performance of Hyundai's Tucson SUV in China," he said.
Hyundai will start to produce the Tucson at the beginning of next year in its joint venture with Beijing Automotive Holding Corp.
Kia will account for 40 percent of Hyundai's target to sell 1 million cars in China annually by 2010, Lee said.
"Everybody was over-optimistic about China's market this year because of breakneck car sales growth last year. But automakers, dealers and customers are expected to be cool-headed next year," he said.
Total sales of China-made vehicles grew by 16.81 percent to 4.58 million units in the first 11 months of this year from a year earlier.
The growth was down from 34 percent last year. Growth of domestic car sales dropped to 16.90 percent during the period from 75 percent last year.
Lee predicted that China's auto market will grow 10 to 15 percent next year.
Hyundai also runs a commercial vehicle joint venture with Jianghuai Automobile Co in East China's Anhui Province and has technical licensing deals with Huatai Automobile Co in eastern Shandong Province, which is producing the South Korean firm's Terracan SUV.
(China Daily December 27, 2004)
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