Hyundai chooses Indonesia but Kia prefers to do CKD in Malaysia over Thailand, here’s why
Hans · Dec 17, 2021 05:38 PM
Hyundai relocates Asia Pacific headquarters to Jakarta
While Kia Motor Asia Pacific reaffirms commitment to Malaysia
For Kia, Malaysia is more attractive than Thailand
One of the benefits of having multiple brands is that you can hedge your bets, which is exactly what the Hyundai Motor Group (HMG) is doing with the Kia brand in Malaysia and Hyundai in Indonesia.
Earlier this year, WapCar.my broke the news that Hyundai is relocating its Asia Pacific regional headquarters in Mutiara Damansara, which also houses the Hyundai Training Academy (HTA), to Jakarta. The retail operations of Hyundai-Sime Darby Motors remain unchanged.
The relocation to Indonesia is necessary because Hyundai is investing USD 1.55 billion (about RM 6.53 billion) into a new plant at the Cikarang industrial area in Bekasi, east of Jakarta, plus a USD 1.1 billion (about RM 4.65 billion) EV battery plant.
Hyundai is attracted by Indonesia’s generous incentives to promote electric vehicles, which has also attracted similar EV-related investments from Toyota (USD 2 billion, or RM 8.42 billion), as well as Chinese battery giant CATL (USD 5 billion, or RM 21.06 billion).
On the surface, it’s easy to think that the Hyundai Motor Group is putting Malaysia aside to focus on Indonesia, but the people at Kia is keen to remind Malaysians that they too have regional head office in Malaysia, but unlike Hyundai, Kia has no intention of moving its regional team elsewhere.
The little known Kia Motors Asia Pacific headquarters is located in Naza Towers at Platinum Park, right at the heart of KL city.
From here, a small team of 31 employees (including Malaysians) oversee Kia’s operations across 32 countries in the Asia Pacific region, including Australia and New Zealand, which are wholly-owned subsidiaries of Kia Motors Asia Pacific.
South East Asia has a population of over 660 million and sells about 3.5 million cars annually, before Covid-19.
It holds huge growth potential but it’s also a region where Japan has it all cornered. Toyota reigns supreme here, especially in Thailand and Indonesia – the region’s two largest car market.
Meanwhile in Malaysia, the third largest car market in the region, Toyota’s compact car subsidiary Daihatsu controls Perodua, Malaysia’s No.1 selling brand.
For Korean car brands like Hyundai and Kia, attempting to penetrate into this region is extremely difficult.
To date, the only country where Korean car brands have made a big impact is Vietnam, the region’s fourth largest car market, where Hyundai has already overtaken Toyota for the top spot and Kia has pushed Honda off to take the third podium spot.
So starting this year, the Hyundai Motor Group (HMG) is adopting a two-pronged approach for the next phase of its assault into the heart of South East Asia.
HMG’s namesake brand Hyundai will tackle Indonesia while Kia, playing its ‘smaller’ brother role within HMG, will push deeper into Malaysia. Why not Thailand you ask? Because Malaysian consumers are more receptive to Korean brands than the Thais.
As far as consumer products are concerned, Thailand is Japan’s colony. The Toyota Hilux, Hiace, and Corolla Altis moves Thailand while Mitsubishi air-conditioners cools their homes and offices, and Lawson convenience stores dominate.
At least in Malaysia, K-brand stores like CU and emart24 are very well received.
Despite Kia’s missteps in the past during the Naza era, there are still over 200,000 Kia cars on Malaysian roads.
In terms of products, Kia is confident that its current generation of cars will wipe Toyota and Honda clean, and Kia is tired of being seen as a minor league player here.
One Korean executive who used to look after the Kia brand in Germany told WapCar.my that the people running Kia know how to build a world class brand. They have already done it in Europe and USA – two of the world’s most competitive car markets.
It’s the same in Russia, where driving conditions are very tough on the cars.
“In my last posting in Germany, Kia is in the major league while Japanese brands are the minor league but over here, the situation is different. I am very sorry that Kia hasn’t been received properly here, it is something that we need to fix very badly,” said a Korean executive told WapCar.my recently.
Between January to November 2021, Kia sold 60,976 passenger cars in Germany while Toyota did 65,771 (excluding commercial vehicles). Honda sold a miniscule 7,242 while Nissan shifted 24,343.
Over in Russia, Kia is ranked No.2 while Toyota is ranked No.7, and the Russians are not known for being gentle with their cars.
“I promise that Kia will be reborn as a newcomer here in Malaysia and become a major key player in the Malaysian automotive market,” said Ted Lee, President and CEO of Kia Motors Asia Pacific.
Malaysia may not be as big as Thailand, but Kia sees Malaysia as the best launch pad to penetrate further into South East Asia, a region where trade barriers are complex and local assembly is necessary for commercial success.
Although Kia already has local assembly operations in Vietnam, the capability of local parts vendors there are still much lower than Malaysia’s, which in turn increases the cost of the cars produced in Vietnam.
Comparatively, Kia noted that Malaysia has a relatively mature automotive parts vendor base, which makes us a good choice as Kia’s regional export hub.
Joey Hong, coordinating director of sales at Kia Motors Asia Pacific said, “We will try to find ways to export Malaysia-built cars to nearby countries and these strategic approaches are bringing Kia’s core competencies into Malaysia. We’ve been doing all the time, from the past in global markets, we know how to do it, and we will be doing the same in Malaysia.
“We can start with the all-new Kia Carnival, a refined large MPV that is scheduled to be produced in April next year, followed by a new Sorento, a large SUV, cutting edge technology, and then we will produce a new Sportage, a worldwide best-selling model of Kia, and the all-new Niro, a crossover with eco-friendly drivetrains, and that is HEV, PHEV, and BEV for sure.”
Meanwhile, Hyundai’s product range is becoming noticeably thinner here, at higher prices too. Only the Hyundai Santa Fe is still locally-assembled.