Hyundai Talks: Buy stake in Uz-Daewoo Plant
SEOUL, Oct 13, 2006 Cheon Jong-woo reiting for Reuters reported that Hyundai Motor Co., South Korea's top auto maker, is in talks with the government of Uzbekistan to buy a stake in a former Daewoo Motor factory in the central Asian state, both sides said on Friday.
In October 2005, an Uzbek industry official said the country had bought the 50-percent stake held by Daewoo in their joint venture but had yet to decide if it would seek a new foreign partner.
"There have been negotiations with Uzbekistan on the plant, but nothing has been decided, and it is unclear if the talks would succeed," a Hyundai official said on Friday.
A source in the Uzbek government confirmed the two sides were in talks, adding, however, that negotiations were "slow".
"Both sides are interested. A (South Korean) delegation has been here, they've seen the plant. But I can't say negotiations are particularly active. We have not signed any documents or memoranda on this," the source told Reuters.
The source said an Uzbek delegation was in Seoul this week to discuss South Korea's investment opportunities in Uzbekistan, including in the car sector.
Analysts have said overseas production is crucial for Hyundai as a
rising won
The plant, with a capacity of 200,000 cars a year, was estimated to be worth $650 million and its charter capital was worth around $200 million.
A South Korean newspaper, the JoongAng Ilbo, reported on Friday that Hyundai said it was in talks with Uzbekistan and that it aimed to complete negotiations within this year, with a plan to expand the factory's capacity to 300,000 vehicles per year.
If labour issues are resolved, the factory could produce small cars such as the Verna and the Click, an unidentified Hyundai official told the paper.
The factory aims to assemble 110,500 Daewoo-brand cars this year, up from 70,070 in 2004. Exports, bound mostly for Russia, are set to rise to 56,926 cars this year from 35,659 in 2004.
Daewoo collapsed during the Asian economic crisis in the late 1990s, and General Motors Corp. and partners took a majority stake in some of its assets in 2002.
Hyundai, which aims to be the world's number five auto maker along with its affiliate Kia Motors Corp. by 2010 in terms of sales volume, sells about three-quarters of its cars overseas.
Hyundai and Kia plan to have around half their production -- or over 3 million vehicles -- abroad within the next five years. Last year they made 2.7 million vehicles at home and 750,000 abroad.
Hyundai has factories in the United States, China and Turkey, and plans to begin building a plant in the Czech Republic within the year.
Kia, which has factories in China and Slovakia, is set to start construction of its first U.S. plant in Georgia.
Shares in Hyundai closed up 0.76 percent at 79,100 won, underperforming the broader market's 1.26 percent gain.
(Additional reporting for Reuters by Shamil Baigin in Tashkent)