Hyundai opens $1 bln China plant, eyes new models

By Kirby Chien

BEIJING, April 8 (Reuters) - Hyundai Motors (005380.KS: Quote, Profile, Research, Stock Buzz), opened a $1 billion plant in China on Tuesday with partner Beijing Automotive, part of an aggressive expansion that could turn the mainland into its largest overseas market by 2010.

South Korea's biggest carmaker and Beijing Automotive Industry Holding are equal partners in a venture that now operates two plants and aims to double capacity in China to 600,000 units by 2010, the companies said in a statement.

"China could become larger than the United States in three years," said Jake Jang, a Hyundai spokesman.

The company expects to sell 100,000 remodeled Elantras built at the new plant this year, pushing total China sales to 380,000 units this year, a 65 percent jump from about 230,000 last year.

The new Elantras, the first new models introduced by Hyundai into China in 18 months, will sell for 99,800 yuan to 129,800 yuan ($14,250-18,540), the company said.

However, analysts worry that Hyundai's projections are too optimistic and the new plant could lead to overcapacity.

Hyundai's sales in China fell to 230,000 units last year from 290,000 in 2006 as the company failed to introduce any new models in one of the world's fastest growing markets.

Analysts said the company needed to cut costs and offer new models to fight global rivals, some of which have thrived in China's soaring car market, offsetting sluggish sales at home.