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Hyundai’s Plan to Expand Commercial Vehicle Line a Risky Move

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Hyundai Xcient Hyundai's Plan to Expand Commercial Vehicle

Hyundai’s heavy-duty Xcient truck

Hyundai needs to expand.

That was the general consensus reached at the conclusion of 2014, both by critics and fans of the Korean automaker. The brand has had a stellar run the past five years, but if Hyundai is going to continue competing with veteran automakers who are far better-established, it needs to have a long-term plan.

Today, Hyundai announced its tactic for catching up with its global rivals. In an effort to broaden its commercial vehicle production, Hyundai will be spending about $1.8 billion over the next five years in segment research and expansion. However, Hyundai’s plan to expand its commercial vehicle line doesn’t come without a good amount of risks.

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Hyundai’s Commercial Vehicle Line Undergoing Substantial Growth by 2020

As part of a new campaign to break into the commercial vehicle market, Hyundai is stepping outside of the passenger vehicle segment into an area which industry forecasters predict roughly 30% market expansion by 2020. This will involve bringing more van, truck, and bus models to Hyundai’s most successful markets–especially the United States.

The investment will include a facility expansion to raise commercial vehicle production capacity from 65,000 units annually to 100,000, creating about 1,000 jobs.

However, the majority of the investment will be going towards research and development, with only 20% being spent on an expansion of the commercial auto production line in Jeon-ju (about 240 kilometers south of Seoul). A new Pilot Center and Global Training Center will also be added.

Skeptics say it will take a long time for Hyundai’s expansion to become profitable, so some are wondering if the Korean company can sustain itself long enough while undergoing these changes, on top of other investments like its new skyscraper in Seoul. It will also be a challenge for the automaker to produce commercial vehicles which abide by strict Korean diesel emissions standards.

While today’s announcement was more about intent than details, we finally have reassurance that Hyundai possesses some guiding plan for the future.

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