SEOUL, June 1 (Yonhap) — Hyundai Motor Co., South Korea’s largest carmaker by sales, said Friday it is considering investing in a local car-manufacturing joint venture (JV) proposed by a municipal government.
The Gwangju city government seeks to establish a vehicle production JV to generate jobs and help support the local economy. The city proposed some tax benefits to investors such as a 75 percent reduction in acquisition taxes and another 75 percent cut in income taxes for the first five years, Hyundai Motor said in a statement.
“The company sent a letter of intent to the Gwangju municipality to see if it makes sense to join as a strategic investor in the JV project. If Hyundai becomes part of the JV, the carmaker can have the JV produce its vehicles under an original equipment manufacturing (OEM) contract,” a company spokesman said over the phone.
As labor costs grow higher at its domestic plants, Hyundai Motor is looking at the OEM option to cut costs, he said.
But the vehicles produced at Hyundai’s plants cannot be transferred for production to another plant without approval from the union. Given this, only a new model can be produced at the OEM plant, the spokesman said.
The union was not immediately available for comment.
Hyundai Motor will decide on whether to invest in the JV after consulting with Gwangju city officials and other potential investors over the project’s validity, the statement said.
This photo shows Hyundai Motor’s corporate logo atop its main office in southern Seoul. (Yonhap)
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