On June 1, industry sources reported that Hyundai Motor's Thailand subsidiary (HMTH) completed the establishment of its CKD facility in Samut Prakan Province last month and has officially begun mass production. The plant will primarily produce electric models, including the Ioniq series, with an annual production capacity of 5,000 units and a sales target of 3,000 units for this year.
Thailand, a major automotive production hub in Southeast Asia, has an annual vehicle production volume of approximately 1.4 to 1.5 million units. The local government is promoting the transition to electric vehicles through subsidies and tax incentives, intensifying competition among global automakers to establish production bases in the region.
Hyundai established its CKD production system two years after receiving approval from the Thailand Board of Investment (BOI) for an investment of about 1 billion baht (approximately $40 million) in 2024. CKD, or Completely Knocked Down, involves sending key components to local facilities for assembly instead of exporting finished vehicles. This approach reduces initial investment burdens and fosters positive relations with local governments, serving as a 'foothold' for entering emerging markets.
Previously, Hyundai entered the Vietnamese market in 2011 through a partnership with the Thanh Cong Group using the CKD method, later establishing Hyundai Thanh Cong Manufacturing Vietnam (HTMV) in 2017 to increase its local market share.
By the end of the year, a CKD facility will also be completed in Saudi Arabia, the largest market in the Middle East. Additionally, Hyundai operates CKD plants in over 15 countries, including Kazakhstan, Egypt, Pakistan, and Malaysia, enhancing its influence in Asia and the Middle East.
A Hyundai official stated, "The Southeast Asian market is heavily influenced by Japanese brands, and recently, Chinese companies have intensified their presence, increasing the need for local joint CKD operations."
Other domestic automakers are also focusing on expanding their CKD operations. Kia held a ceremony last year to inaugurate a CKD joint plant in Kostanay, Kazakhstan, and began production of the Sorento. KG Mobility plans to establish new CKD plants in Vietnam and Saudi Arabia this year.
The expansion of CKD production is also contributing to growth in logistics. Hyundai Glovis reported a 10.3% increase in its distribution revenue for the first quarter of this year, totaling 3.87 trillion won compared to the same period last year. Industry analysts believe that the increased demand for parts transportation due to the expansion of CKD production by domestic automakers has contributed to this improvement.
Moon Hak-hoon, a professor at Osan University’s Department of Future Automotive Engineering, noted, "CKD allows companies to avoid tariff burdens while expanding their market through local production, indicating a growing demand for CKD plants in emerging automotive markets."
* This article has been translated by AI.
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