Hyundai Motors Reinvested US$740 Million in China’s Auto Companies


The capital increase will be mainly used by Beijing Hyundai to increase production capacity, and the main source of funds will be the profits of the joint venture. Yesterday, the reporter was informed that Hyundai Motor Corporation plans to invest an additional US$740 million in 2007, mainly to expand the company's joint venture auto companies in China. The capital increase will be mainly used for Beijing Hyundai as the largest and most important joint venture project of Hyundai Motor in China. The modern capital increase will mainly meet the development needs of Beijing Hyundai in the coming years. A person in charge of Beijing Hyundai told reporters that since Hyundai's investment in China and its joint venture are not just Hyundai, Beijing, although the overall amount of capital increase has been disclosed, the specific allocation of investment to each company has not yet been finalized. The relevant amount is still being calculated. The official said at the same time that since Beijing Hyundai is the largest joint venture of Hyundai Motor and the largest car manufacturer in the future, Beijing Hyundai will naturally occupy the most important proportion in the future capital increase plan. It is understood that Beijing Hyundai is preparing to build a second factory in Beijing. The plan of this factory is to produce 600,000 cars in China by 2007. Funds mainly come from the profits of the joint venture It is reported that the funds for this investment will not be directly injected by Hyundai Motor Co., Ltd., but will be achieved through the profit sharing of the joint ventures to realize the rolling development of capital reinvestment. An official in charge of external publicity of Beijing Hyundai said that Hyundai Motor’s investment in China is actually the profit of the joint venture, which has become the main way for the joint venture to increase capital in China. The official explained that the main starting point of this approach is that the strong growth of the market requires financial support, and another reason is that if the tax rate of the joint venture profits is much higher than the tax rate of the investment projects, the development prospects can be predicted. The reinvestment of funds to achieve accelerated business development is obviously better than direct access to the profits of the joint venture. For the specific flow of capital increase, the official told reporters that in addition to Beijing Hyundai, there is another modern project in China, Dongfeng Yueda Kia Motors. In addition, Hyundai alone or modern-led core components supporting companies in China and research and development Institutions will also receive support from the replenishment plan. Auto giants have announced capital increase in China. It is reported that Kia Motors, a member of Hyundai Group, is also increasing investment in China. The company plans to invest 600 million U.S. dollars in China in 2007 to establish a second production plant with an annual production capacity of 400,000 vehicles. The combined annual production capacity of Hyundai and Kia will reach 1 million vehicles. Previously, General Motors announced a $3 billion capital increase plan, while DaimlerChrysler Group will invest $1.2 billion in the Chinese market to produce Mercedes-Benz branded cars and commercial vehicles. The Volkswagen Group also announced a large investment plan of 5.3 billion euros. We must build China into the most important global production base for the public. In 2003, Hyundai Motor sold a total of more than 52,000 vehicles, operating profit of approximately US$250 million, and achieved revenue of US$1 billion. However, Beijing Hyundai’s stakeholders expect that this year's profit margins will be difficult to maintain at the level of last year, because foreign automakers in China have started to increase production, and Chinese auto prices have rapidly declined. Source: The Beijing News

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