Hyundai Motor Group to invest $73.7 bn in next four years

Hyundai Motor Group, the world's fifth-largest automaker, said today it planned to spend 81 trillion won ($73.7 billion) over the next four years on factories, research and a new headquarters, Associated Press reported.

The announcement follows Hyundai projecting its slowest annual sales growth in over a decade. The South Korean government had pressured businesses to stop hoarding cash reserves and step up investment and hiring.

According to Hyundai, the average annual spending during the four years was a 35-per cent increase from 2014.

The company plans to build two new factories to expand capacity in China, which would start operations in late 2016 and 2017. Hyundai Motor affiliate Kia Motors Corp was also expanding the capacity of its existing Chinese factory.

Hyundai is also pursuing plans for new headquarters including auto-themed exhibition halls, hotels and shopping malls in Gangnam, a trendy district in southwestern Seoul.

The company said in September that it would pay $10.1 billion for a 79,342 square metre (854,030 square foot) plot of land for the new headquarters that it believed would add lustre to the brand.

The expansion of factories at home and abroad and construction of the new headquarters in Seoul would account for over half of the four-year investment.

"By investing such a record amount, we are planning to focus on securing core technologies in environmentally-friendly cars, smart cars and other next-generation cars," Hyundai said in a statement, AFP reported.

Under the plan, Hyundai would spend 11.3 trillion won on development of environmentally-friendly models such as hybrids and electric-powered cars.

Additionally 2 trillion won would be spent on the development of internet-enabled "smart cars," it said, adding it would be hiring over 7,000 new researchers and engineers.

Hyundai last week announced plans to build two additional plants in China, the world's top auto market, where the company currently operated three plants.

The company had for over a decade steadily expanded its presence in the global market including the US, taking on Japanese giants like Toyota and Honda.

However, it has been struggling recently with a weak yen blunting its price competitiveness vis-a-vis Japanese rivals in overseas markets.