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Last Updated: Thursday, 17 June, 2004, 05:53 GMT 06:53 UK
Hyundai to get bigger in China
South Korea's Hyundai has become the latest car maker to announce a big expansion in China.

Hyundai said it planned to spend $740m (414m) in an effort to boost production at its Chinese operation.

The move will increase Hyundai's output potential in China more than fourfold, to 600,000 vehicles a year by 2007.

Separately, Hyundai's Kia subsidiary is to spend nearly $360m raising its Chinese capacity to 430,000 cars a year, from 130,000 currently.

The investment programme will lift Hyundai's total output potential in China to more than 1 million vehicles a year.

Supply boost

Both Hyundai and Kia's Chinese operations are run jointly with local manufacturers.

Hyundai's China expansion plans come hot on the heels of similar investments from a string of auto firms keen to boost their share of what is now the third biggest car market in the world.

Altogether, foreign car makers have pledged to spend a total of $13bn by the end of the decade, an investment which will triple the country's total car manufacturing capacity.

The flood of new investment comes despite fears that the supply of cars may soon outstrip demand.

The Chinese government has warned that capacity could reach 14 million vehicles a year against demand of just 7 million by 2007.

There are also fears that the economic boom which has fuelled demand for cars in China may be under threat.

The Chinese authorities earlier this year warned that recent double-digit growth rates were unsustainable, and announced plans to take some of the heat out of the economy.

Figures out earlier this week showed that Chinese car sales fell by nearly 20% in May compared with the previous month, with analysts attributing the decline to tighter credit terms imposed by lenders.


SEE ALSO:
China car sales go into reverse
15 Jun 04  |  Business
Carmaker GM raises China stakes
07 Jun 04  |  Business


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