April 26, 2024

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[THE INVESTOR] Hyundai Motor's top executive on Feb. 7 said that South Korea’s largest automaker is not planning on building a new assembly plant in the US.

“We don’t have plans to build a second US plant,” Chung Jin-haeng, president of Hyundai Motor, told reporters after a meeting in Seoul with the trade minister and heads of other carmakers. 

Hyundai Motor Group Chairman Chung Mong-koo visits the carmaker's US plant in Alabama.

The remark comes after increasing speculation that Hyundai Motor will have to construct a second US facility, in addition to its first plant in Alabama, pressured by the protectionist threat from President Donald Trump. The US president has been urging global auto giants to expand their domestic businesses, threatening to impose hefty tariffs on cars imported from overseas plants, especially Mexico.

Ahead of Trump’s inauguration in January, Hyundai Motor Group -- which includes Hyundai Motor and Kia Motors -- announced it will invest US$ 3.1 billion in the US over the next five-year period, joining global auto giants that have announced large investment plans. At the time, the automaker said it is mulling plans to build another auto plant in the country to meet the increasing car demands.

In the meantime, Chung also expressed the possibility of the nation’s second-largest conglomerate exiting the Federation of Korean Industries, the nation’s richest business club that has been at the center of a controversy in the ongoing presidential scandal.

“I will have to follow what other (companies) are doing,” Chung said when he was asked on Hyundai’s position as its conglomerate peers such as Samsung Group and LG Group have left the FKI.

If Hyundai withdraws its membership of the 56-year-old FKI, it will mark the exit of all the nation’s four largest conglomerates that have sustained the business body. LG Group and Samsung Group officially announced their withdrawal from the FKI, while SK Group said it will stop paying membership fees and leave the organization.

The four conglomerates made up more than half of the yearly membership fees of 49.2 billion won (US$42.98 million) collected from over 600 companies.

The FKI is suspected of playing a key role in collecting funds from the large business groups totaling 80 billion won for two dubious foundations controlled by Choi Soon-sil, President Park Geun-hye’s confidante, who is at the center of the influence-peddling scandal. Since the revelations, there have been growing public calls to disband the lobby group that has been connected to a series of corruption scandals in recent years.

By Ahn Sung-mi (sahn@heraldcorp.com)