Hyundai Resumes Construction of Brazilian Plant

South Korean carmaker Hyundai will resume construction of its plant in Brazil that was initially put on hold due to the influence of the economic recession. The company earlier this month established a branch office in Brazil and appointed Managing Director Kim Seong-bae as its head, gasgoo.com informed today citing a report by JoongAng Daily.

Hyundai will invest a total of $600 million in the new production facility in Brazil, after signing an agreement with the authorities of Sao Paolo in September 2008.

"While traditional automobile markets like the U.S. and Europe are almost at a standstill, Brazil, along with China, is the most rapidly growing market," said a Hyundai Motor official in charge of global sales, according to the aforementioned source. "We decided to rush the construction of the plant as we expect global automotive demand to return to levels seen before the global financial crisis [in the first half of 2010]."

The new Brazilian factory will have a capacity of 100,000 vehicles per year when it will officially start production in the second half of 2011. It will manufacture several Hyundai models, including the i20 and SUVs.

Hyundai is one of the manufacturer which might represent a threat for Japanese companies, mostly after the impressive growth the South Korean firm has shown in the last months.

"Hyundai is awesome," Honda Motor Co. CEO Takanobu Ito was quoted as saying by The Associated Press. "They are undoubtedly a threat because their products are cheap, and the quality is improving."

"Hyundai is the biggest threat for the Japanese automakers," Nissan's senior vice-president Shiro Nakamura told The AP. "They have the technology, but they seem to have cheaper labor. We have to offer the equivalents of sushi, tempura and kaiseki to compete against Korean barbecue."