Indonesian firm strives to renew contract as market share shrinks
Hyundai Motor co. stopped shipping commercial vehicles to Korindo Group of Indonesia, ending its largest contract in Asia, the company said on Sunday.
The world’s fifth-biggest carmaker refused to renew its contract to produce trucks and buses for Korindo since the deal expired on June 15, the Jakarta-based Korean-run developer said.
“The commercial vehicle contract with Hyundai expired last June and we have been waiting for Hyundai return to the table but Hyundai refused to renew it,” an official at Korindo said.
Hyundai has been selling commercial vehicles as a complete knock-down kit, or CKD for Korindo to assemble distribute in Indonesia since 2007. It replaced parts of used car imports in Indonesia and helped Korindo to avoid import taxes. Korindo has been producing vehicles from inventories leftover from last year but it now has run out of stock, a Korindo official said.
A Korindo official was quoted as saying that it was ready to file a lawsuit against Hyundai for not signing the deal again.
“There are problems with the contract and how the deal came to an end,” the Korindo official said without specifying further.
Hyundai trucks and buses entered the Indonesian market with 0.9 percent market share in 2007 after selling 408 vehicles. The figure jumped to 4.4 percent the following year after selling 3,247 vehicles, but it has been declining since then, dropping to 3.2 percent in 2009 and further to 1.5 percent, and to 0.8 percent last year.
A Hyundai official said a rumor that it plans to build a separate factory was an idea floated in its Vietnam office, but a raw one requiring a feasibility study.
“Choi Han-young, vice chairman of Hyundai Motor did make a visit to Indonesia but it is still too early to talk about building a factory for commercial vehicles there,” the Hyundai official said.
By Cynthia J. Kim (email@example.com