South Korean vehicle distributor Hyundai Asia Resources Inc. is investing P2 billion in its first Philippine assembly facility as a part of its goal to join the country’s Comprehensive Automotive Resurgence Strategy or Cars program.
“This is going to be a step towards the Cars program. This is our first assembly operations in the country. We wanted to master the operation and at the same time ensure that we have the best quality and the assurance of the models we assemble―Eon and H350,” Hari president and chief executive Ma. Fe Perez-Agudo said over the weekend.
The Cars program offers P27 billion worth of time-bound and performance-based fiscal and non-fiscal incentives to approved players. The incentives will be used to support fixed capital expenditures in new parts manufacturing capabilities and to encourage large scale production in vehicle manufacturing.
Perez-Agudo said while Hari was finalizing the design of the assembly plant in Laguna, it had a temporary leasing agreement with Star Motors Manufacturing to produce Eon and H350 models.
Star Motors currently assembles Nissan Patrol units in its Sta. Rosa plant in Laguna.
Eon is is one of Hyundai’s bestselling models while H350 is a light commercial van that was launched in the Philippines in a recently-concluded auto show.
Production of Eon started in March 2017, while local assembly of H359 will begin this April. Hyundai targets to produce 10,000 units of Eon and 1,000 units of H350.
“This has always been the dream of Hyundai for the Philippines. We have always wished that we would be part of the total industry development and we would like to support the initiatives of the government particularly the Board of Investments and the Trade Department in its effort to promote the country as a hub for assembly and manufacturing,” Perez-Agudo said.
The assembly plant is the second major investment of Hyundai in the Philippines, after the company invested P1 billion in a green logistics center also in Laguna.
The company tapped the Motor Vehicle Development Program, an older incentives scheme of the Board of Investments, for the fist two models.
Perez-Agudo said despite Hyundai’s late entry in the Cars program, the company was capable of catching up with the required volume of 600,000 units within the six-year life of the program.
“There is a deadline and were aware of it. The way I see it, we have until next year to submit the requirements.There are requirements and we would like to fully comply with these. We are currently studying and conducting a survey on the requirements for the Cars program and submit this to Hyundai company in Korea and see how they could support Hari,” she said.
The company targets to submit the proposal to Hyundai Korea within the next six months upon the conclusion of the study. A part of the study is the required financial investments.
“We should also submit a parts development program. We really wanted to make our assembly a success.This is major investment of Hyundai since we are now venturing into manufacturing. That’s why they [Asean countries] are looking at us. We really wanted to make our assembly a success,” she said.
Hari is looking at selling 40,000 units of both passenger and commercial vehicles in 2017, up by 21.2 percent from the 2016 total sales of 33,000 units.