HANOI -- Hyundai Motor has begun work on a second plant in Vietnam that will boost its capacity by 140% in a growing market.
The South Korean automaker will invest 3.2 trillion dong ($138 million) in the Ninh Binh Province site, which is slated to come online in phases starting in 2022.
The plant will increase Hyundai's Vietnamese production capacity to 170,000 vehicles a year when it becomes fully operational, likely in 2025. The factory is expected to be among the country's largest passenger vehicle plants.
The country's total auto sales reached an all-time high of more than 400,000 last year, sources including the Vietnam Automobile Manufacturers' Association show, and demand is expected to grow further as income levels rise. The Vietnamese government has taken steps to encourage both domestic and foreign automakers to build cars in the country, such as scrapping tariffs on auto parts.
Hyundai entered the Vietnamese market in 2009 through a joint venture with local conglomerate Thanh Cong Group. It imports parts for local assembly in what are known as knock-down kits.
The venture sold about 25,000 autos here in the first six months of 2020. It led the country in new-auto sales by brand for the first time, outperforming Toyota Motor, according to South Korean media.
Japanese players including Toyota and Honda Motor have increased the share of vehicles they build here. Vietnamese conglomerate Vingroup in June 2019 started a plant for production of the country's first homegrown auto brand, and has plans to make electric vehicles as well.