Hyundai to delay parts plant, open showroom

The Phnom Penh Post

Written by Nguon Sovan and George Mcleod
Friday, 27 February 2009

The announcement follows official visit from Hyundai boss to gain support for new factory

South Korea's Hyundai Motors said it is delaying construction of a parts assembly plant in Cambodia after the company's vice chairman, Choi Han Young, met Prime Minister Hun Sen and National Assembly President Heng Samrin to drum up support for the venture.

Jason Sun, director of Star Motors (Cambodia) - the authorised local Hyundai distributor - said that the plans would have to be delayed because of the global financial crisis, which has seen automobile demand nosedive around the world, including in Cambodia.

However, he said Hyundai still planned to go ahead with a new Hyundai showroom in Phnom Penh to increase the company's presence.

"Cambodia is a small market, but the standard of living is rising, and there is lots of potential," he said.

The showroom, located on Russian Boulevard, has already been built and will be launched "in a few weeks", Sun added.

Choi met Hun Sen on Tuesday and Heng Samrin Wednesday, and an application for the parts assembly plant is currently being considered by the authorities.

"We have submitted our investment proposal to the council for the development in Cambodia already, but there is no approval yet," said Sun, declining to reveal the investment cost, the location and when construction will begin.

"I received the investment proposal for [Hyundai's assembly plant]," Sok Chenda, secretary general for the Council for the Development of Cambodia, said Thursday. He declined to reveal the details of the proposal.

Tough market
Around 300 Hyundai vehicles are currently sold each year in Cambodia, but the company is entering a tough market, with all car companies reporting weak sales on the economic slowdown.

Kong Nuon, president of TTHK Co Ltd, Cambodia's only Toyota distributor, forecast that auto sales would drop 40 percent within the next two years due to the economic crisis and the real estate downturn.

He added that 2,800 new cars were typically sold in Cambodia each year, and about 20,000 secondhand automobiles changed hands. Sales of new cars were shared between around six automobile importers: Toyota, Ford, Mitsubishi, Nissan, Mercedes and Ssangyong, he said.

In a related development, the local partner in a joint venture Yamaha motorcycle manufacturing facility in Phnom Penh told the Post Monday that construction had also been delayed as a result of the global economic crisis.

Kong Nuon, who is also president of Kong Nuon Import & Export, added that planned capacity had been scaled back between 30 and 40 percent from 30,000 motorcycles in the first year.

Globally, Hyundai has fared better than other car companies. Bloomberg reported the Seoul-based company saw US sales jump 14 percent from a year earlier in January, while industry-wide sales fell 37 percent.