Hyundai Motor said Thursday that it will move to build a new production plant in Chongqing of China to make yet another leap into the world's largest new vehicle market.
The company said its chairman, Chung Mong-koo, will meet with top Chongqing officials on Thursday and sign a strategic cooperation pact.
Hyundai said the pact will outline the carmaker's intent to give top priority to the city located in southwest China when it picks the site for its fourth passenger car assembly plant, while Chinese municipal authorities pledge to offer related support.
"Once the Chinese side completes its deliberation process, Hyundai will make the final decision on the plant's construction," the company said in a press release.
The carmaker, the flagship company of Hyundai Motor Group, the world's fifth largest automotive conglomerate, said it has been eyeing the building of a production plant in China's interior that promises growth potential.
Chongqing also put considerable effort to attract Hyundai by pointing out its sizeable population, and geographical location linking the eastern and western parts of China.
Hyundai said the new plant will have the capacity to build 300,000 vehicles per year, which will augment the three assembly lines it has on the outskirts of Beijing that currently can produce a combined 1.05 million units per year. The boost in numbers will better position the company to expand its market presence in China.
The Chinese auto market is expected to top 20 million units in 2016 and will become a hotly contested battlefield among the world's largest carmakers.
Hyundai said Volkswagen and GM are all moving to build up local production facilities reaching 4.23 million and 3.8 million units, respectively in the coming years, making it essential for the South Korean carmaker to take similar steps.
As part of such a move, the company is in the process of building its first overseas commercial vehicle plant in Sichuan that can make 150,000 trucks per year. The plant to be completed in the first half of the year will have its own engine production line, and combined with 10,000 bus production capacity from a plant run by Nanjun Automobile -- its local partner -- Hyundai will be
able to churn out 160,000 commercial vehicles every year.
The Chinese commercial vehicle market is expected to reach 4.2 million units and may balloon to 5.3 million in 2020.
By Lee Ji-yoon and news reports (email@example.com