Having been unleashed with a series of angry Trump tweets, the outpouring of carmarker investments in the US has turned into a veritable torrent, and just hours after GM announced it would invest $1 billion in new US factories, adding 1,000 jobs, Korea's Hyundai Motor Group said it also plans to lift U.S. investment by 50% to $3.1 billion over five years and may build a new plant there. It has become the latest auto firm to announce fresh spending following Ford, Fiat, Toyota and GM, after President-elect Donald Trump threatened to tax imports.
As a reminder, Trump has repeatedly warned of a 35% tax on vehicles imported from Mexico, where many automakers have taken advantage of the country's lower labor costs. Toyota Motor, Ford, and Fiat Chrysler have all recently unveiled new U.S. investment plans, while over the weekend German automakers were the latest to come under fire from Trump, provoking a blistering response from Angela Merkel.
According to Reuters, Hyundai Motor and Kia Motors which make up the Hyundai Motor Group have not been directly criticized by Trump but they may have felt vulnerable because among major brands, they have one of the lowest ratios of cars built in the United States to cars sold.
To be sure, just like all other carmakers who reacted to pressure by Trump, only to deny they did so, Chung Jin-haeng, president of the group, denied the plan was due to, drumroll, pressure from Trump, adding that a new U.S. factory would depend on whether demand improved under the next U.S. administration.
"We have to be committed to the U.S. market - a strategically important market which can make or break our global success," he told reporters in Seoul on Tuesday.
Hyundai plans to spend the $3.1 billion to retool existing factories in the United States and boost research on self-driving cars, artificial intelligence and other future technologies, Chung said.
He also said that the group is considering a new U.S. factory to build high-margin, high-demand models such as a U.S.-specific sport utility vehicle and a Genesis premium vehicle. That would come on top of Hyundai's factory in Montgomery, Alabama, and a Kia plant in West Point, Georgia.
Analyst, meanwhile, are skeptical if this presidential pre-appeasement will work:
Ko Tae-bong, an auto analyst at Hi Investment & Securities, said that while the increased investment would please Trump, it would be risky move to invest in a new U.S. plant. "This could be a trap for Hyundai," he said, citing peaking U.S. market demand and the group's sagging global sales. Kia also has a plant in Nuevo Leon, Mexico, at which Hyundai plans to start making cars this year.
But Chung said the group was 'agonizing' over the Mexico plant.
It just started production last year as Trump threatened a big tax on imports from Mexico and as U.S. demand for smaller cars, which Mexican plants tend to specialize in, is shrinking.
Kia said last year that it plans to build 400,000 vehicles a year at its Mexico plant, but a spokesman said on Tuesday that the output figure was subject to change.
Meanwhile, the biggest Korean carmaker is facing rising global pressure Last year Hyundai and Kia posted a 2 percent decline in combined annual global sales - the first fall in nearly two decades, although the duo have forecast sales to rebound 5 percent in 2017.