Hyundai, Toyota to compete in Brazil

A showdown between Hyundai Motor and Toyota is expected in Brazil, as the two prepare to sell small vehicles in the world’s fifth largest automotive market upon the completion of new factories there.

According to Hyundai Motor officials, its first plant in Brazil has been operating on a test run before it begins making cars around Sept. 20. The opening ceremony will take place in October or November.

The new facility, located on 1.4 million square meters in Piracicaba, near Sao Paulo, will produce the HB20, a modified version of the i20. “HB” stands for “Hyundai Brazil.”

“Our market share is still low in the (Brazilian) market with Hyundai taking up around 2.3 to 2.4 percent and its affiliate Kia Motors with around 1.1 to 1.2 percent,” an official from Hyundai Motor Group said. “But the importance of the market is rising with big growth potential. In a simple comparison, about 1.2 million cars are sold in the domestic market while about 3 million are sold in Brazil.”

The car will be offered as a hatchback, saloon or small sport utility vehicle and will be equipped with a 1-liter or 1.6-liter “flex-fuel” engine able to run on ethanol, like most cars in Brazil. The three models of the HB family were exclusively developed for the Brazilian market by a co-operative of Brazilian and Korean engineers.

Korea’s largest automaker will first start sales of the hatchback model of the HB20 from Oct. 10 and other vehicles in the HB family will go on sale next year. It plans to produce 20,000 cars at the new factory this year and increase the volume to 150,000 next year.

South America was the last major region where the world’s fifth bestselling car-making group, did not have a plant, while its competitors, including Nissan, Toyota and Volkswagen, were expanding their factories or building new ones in Brazil reflecting the market’s sales potential and regulatory changes encouraging local car production.

Toyota opened a third plant in Sorocaba, Sao Paulo, last month, with the initial aim of producing 70,000 cars a year, in efforts to expand its presence there. It will begin producing Etios compact cars this week.

Toyota President Akio Toyoda described the four-door Etios, which will also be produced in hatchback and sedan versions, as “a car made by Brazilians for Brazilians” during the inauguration of the plant last month, emphasizing the automaker’s commitment to the market.

Toyota’s new plant is obviously a threat to Hyundai, as the two auto giants target the same small car segment in Brazil.

Hyundai and Toyota are still minor players in Brazil where Fiat, Volkswagen and GM are the three major brands, followed by Ford and Renault.

Hyundai has been surpassing Toyota in recent years despite the Japanese firm aggressively expanding to fast recapture lost shares in the global market.

According to the National Association of Motor Vehicle Manufacturers (Anfavea) in Brazil, Hyundai sold fewer cars than Toyota in 2009, selling 71,049 and 93,506, respectively.

But in the past two years Hyundai sold more vehicles than Toyota, with its sales volumes exceeding 100,000. Hyundai sold 106,012 in 2010 followed by 114,927 vehicles in 2011 while Toyota sold 99,585 and 99,236 in the same years.

Although the battle is not yet finished as this year Hyundai has seen a slight decrease in sales at 51,149 as of July, 4,000 fewer than Toyota. <The Korea Times/Kim Tae-jong>

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