Hyundai Motor Company's plant in Deltamas, Indonesia / Courtesy of Hyundai Motor Group

By Kim Hyun-bin

Hyundai Motor Group is seeking to expand its presence in Indonesia and other Southeast Asian countries to offset declining sales in China, according to industry analysts Monday.

The combined sales of Hyundai Motor Company and Kia Corp. in China peaked with 1.79 million cars in 2016, but the number has since been declining, dropping below 500,000 last year. Sales started to drop after the deployment of a U.S. Terminal High Altitude Area Defense (THAAD) in Korea in 2016, triggering a strong boycott of Korean products in China.

The country's leading carmaker is now setting its eyes on ASEAN countries centered on Indonesia to become its main markets in the region.

"The Indonesian plant is smaller than Chinese plants but is targeting domestic demand in Indonesia as well as Southeast Asian countries," said Song Sun-jae, senior analyst at Hana Financial Investment. "Although the Indonesian market is dominated by Japanese car brands and difficult to penetrate, I think there is an opportunity for Hyundai to target a niche market."

Hyundai Motor Group Chairman Chung Euisun is planning to meet with Indonesian President Joko Widodo at the completion ceremony of a plant in Indonesia on Wednesday, which is set to be the second meeting between the two since last October.

Hyundai Motor Group Chairman Chung Euisun

The completion ceremony for the Hyundai Motor plant will be held at the Deltamas Industrial Complex 40 kilometers from Jakarta, with reports that both Chairman Chung and President Joko Widodo are confirmed to attend. If this meeting is successful, there is growing interest in whether Chung and Widodoi will meet to discuss electric vehicle (EV) production in the region.

Hyundai Motor's Indonesian plant is the company's first to be built in one of the ASEAN member countries. The plant started operation in mid-January and is currently producing the Hyundai Creta subcompact crossover SUV. The completion ceremony was originally scheduled to be held in January, but was postponed due to COVID-19. The plant will also start producing Hyundai's IONIQ 5 within this year.

Chairman Chung is reportedly scheduled to depart to Indonesia by private jet, Tuesday, a day prior to the completion ceremony. Previously, Chung and President Widodo both attended the 'Future EV Ecosystem?for?Indonesia' held at the Jakarta International Expo (JIExpo) last October and discussed ways to expand EV production and cooperation.

"It is difficult to give a confirmation on the schedule of our top management," a Hyundai Motor Group official said.

Indonesia holds 20 percent of the world's nickel reserves and produces battery raw materials such as manganese and cobalt.

President Widodo has been showing a lot of interest in Korean companies' investing in Indonesia, and attended the groundbreaking ceremony for a joint battery cell plant in Indonesia between Hyundai Motor Group and LG Energy Solution held last year.