AsemconnectVietnam - Hyundai Motor Co., South Korea's biggest automaker, has set up a joint venture with its Vietnamese partner Thaco to expand production of commercial vehicles as part of its efforts to increase its presence in the Southeast Asian market, industry sources said Tuesday.

Hyundai and Thaco plan to complete the construction of a commercial vehicle plant in the Vietnamese central province of Quang Nam by July with an annual production capacity of 20,000 units. If the Vietnamese company's existing facilities in the province are included, Hyundai's annual production capacity will increase to 30,000 units of buses and trucks per annum.

The establishment of the 50-50 joint venture is a departure from Hyundai's commissioning of Thaco to produce and assemble its commercial vehicles.

A source with knowledge of the local industry said Hyundai has invested some US$100 million in the joint venture and production expansion as part of its strategy to foray into the Southeast Asian region as well as Vietnam.

The South Korean automaker tops the list of players in the 2.5-ton or higher truck and bus segment, accounting for more than 25 percent of the Vietnamese market. Hyundai's sales in 2016 soared 23 percent from a year ago to 112,332 vehicles.

Through the planned production expansion, Hyundai aims to meet the growing demand in Vietnam, which has seen its annual economic growth at a clip of 6 percent.

The production expansion is seen as Hyundai's scheming to turn Vietnam into a bridgehead for tapping into the 10-member Association of Southeast Asian Nations. Hyundai is to reap the fruits of economic integration in the region with the establishment of the ASEAN Economic Community, or AEC, in 2015, to remove tariffs on commercial vehicles in phases.

In the mid- and long-term plan, Hyundai is considering the option of having parts of commercial vehicles produced in Vietnam to establish a system of producing commercial vehicles collectively.

Source: Reuters.com