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China commercial vehicle JV agreement

2010.10.22 No. 652

Corporate Disclosure to Korea Exchange

Disclosure date    :             October 22, 2010
Disclosure title     :             Signing of an agreement to establish a commercial vehicle joint venture in China

1. Joint Venture Partner     :             Sichuan Nanjun Automotive Group

2. Date & Time                :             8 pm, October 21, 2010

3. Investment Size             :             KRW 500 billion (Nanjun 50% : HMC 50%)

4. Investment Sector         :             Commercial vehicle (all parts including production, sales, R&D, service)

5. Date of Decision           :             October 21, 2010

5. Notes
A. The above details are subject to change depending on relevant laws and market environment of China and Korea .
B. The date of decision is based on the date of signing.
C. Please refer to the below press release for additional information.

Press Release
October 22, 2010

Hyundai Motor Company signs an agreement to establish a commercial vehicle joint venture in China

Hyundai Motor Company (HMC) will establish a commercial vehicle joint venture company in partnership with Ziyang Nanjun Automobile Co., the largest commercial vehicle producer in Sichuan , China . This joint venture heralds Hyundai’s full entry into the largest commercial vehicle market in the world.

This agreement will enable Hyundai to pursue joint projects with Nanjun on every aspect of commercial vehicle business, including production, sales, R&D, and service of trucks, buses, and engines.

The joint venture will effectively capture commercial vehicle demand in China ’s western region, demand which is increasing rapidly as result of government’s western region development project. While other foreign commercial vehicle manufacturers invested in coastal cities such as Beijing , Guangzhou , and Shanghai , Hyundai has chosen to invest in Sichuan , the hub of western region development projects.

Hyundai and Nanjun Automobile will each invest a 50% share in the KRW 500 billion venture to establish a full line up of buses, trucks, and engines. The joint venture will utilize Nanjun’s existing production facility and increase product development efforts to improve current models’ product value and features. The venture will also build a new, large scale plant to launch various models customized for the local conditions in China .

Hyundai expects that a full commercial vehicle line up will also create synergy with its passenger car line up, which continues record sales growth in the Chinese market.

The commercial vehicle market in China is the largest single commercial vehicle market in the world with an estimated demand of 4.5 million vehicles in 2010. The market is expected to grow rapidly as development of China ’s interior region continues, and the industry demand is expected to reach 5.5 million units by 2015.

Hyundai plans to sell 90,000 commercial vehicles in 2011 with the target of reaching 5% market share by 2015 with sales of 300,000 vehicles. 

Nanjun Automobile was established in 1998 and is the 11th largest commercial vehicle manufacturer in China . It operates two plants in Sichuan province with total annual capacity of 120,000 vehicles and manufactures a full line up of commercial vehicles.

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