Hyundai Motor Group announced a plan to expand its facilities in China on Thursday, under which it will build two manufacturing plants in the world’s largest auto market by 2017.

Construction of the plants in the southwestern city of Chongqing and northeastern Hebei province will start as early as 2015 and wrap up around 2017, the company said in a press release. 

The two factories will have the capacity to produce up to 600,000 units of mostly small cars every year. It will raise Hyundai’s annual production to 1.81 million units from the current 1.21 million manufactured at three plants near Beijing. Hyundai’s affiliate Kia will also expand its factory in Dongfeng Yueda to increase annual production to 890,000 units from the current 740,000.

The South Korean auto giant decided to make the investment in China to maintain its market share at around 10 percent until 2018.

The facility investment will be made through Beijing Hyundai Motor, a 50-50 joint venture between Hyundai Motor and Beijing Automotive Industry Holding.

The investment comes two years after Hyundai chairman Chung Mong-koo suspended production expansion in 2012 over quality-control concerns. According to sources, the Hebei plant was not originally planned but was added to the investment list upon request from Chinese officials seeking for revival of the local economy.

The company aims to join the ranks of the top three carmakers in the Chinese market alongside GM and Volkswagen. Hyundai saw a sales growth rate of 7.6 percent on-year in November while Kia had 17 percent.

But the company has reportedly been struggling with supply constraints. Meanwhile, GM plans to invest $12 billion in its Chinese business by 2017 and Volkswagen plans to invest $22.1 billion by 2018.

By Bae Ji-sook and news reports
(baejisook@heraldcorp.com)