Hyundai Infracore to set up German unit in bet on Europe

HD Hyundai Infracore Co., a South Korean construction equipment manufacturer, will set up its first directly managed European subsidiary in Germany, which it hopes will make up for weak demand from debt-laden Chinese developers.

The company, an affiliate of the world’s No. 1 shipbuilder HD Hyundai Heavy Industries Co., officially announced on Tuesday that it will establish a wholly owned unit in Mannheim, Germany.

It will oversee sales, after-sales service and component supply for its construction equipment under the DEVELON brand, reducing the company's dependance on dealers.

To do so, it will build a three-story building in the German city, comprised of office space, a training center, a repair center and a component warehouse. It is scheduled for completion in the second half of next year, HD Hyundai Infracore said on Wednesday.

The move underlines HD Hyundai Infracore’s ambition to expand its presence in Germany and neighboring countries, with China’s wobbling property market dimming its business outlook in Asia.

“As concerns are growing about the Chinese economy and its prolonged downturn, we must strengthen our presence in developed markets such as Europe and North America to maintain steady growth,” HD Hyundai Infracore Chief Executive Oh Seung-hyun said.

“We hope our German subsidiary will raise our market share in Europe over the long term,” he said Tuesday at a ceremony in Mannheim to announce the plan to build a unit there.

Up to now, heavy machinery companies tend to ship their products to Europe mainly through dealers in each country.

Germany is Europe’s largest market for construction machines, taking a 25% share in the region, where about 150,000 units of excavators and wheel loaders each are sold a year.

Oh expects demand for the mainstay construction machines in Europe to remain stable at those levels for years to come.

HD Hyundai Infracore’s unit in Mannheim will mainly target three German-speaking countries: Germany, Austria and Switzerland. Its office building will be built on a 10,650 million square-meter lot of land.

SPORTS MARKETING

The heavy machinery maker also sets its eyes on the UK, Europe’s second-largest market for construction machines.

To raise its brand awareness, it will sponsor a friendly soccer match between the national teams of South Korea and Wales to be held in Cardiff, the capital city of Wales, on Sept. 7.

To make the best use of the sports marketing opportunity, HD Hyundai Infracore will place a light-emitting diode (LED) advertising board within the stadium and place DEVELON excavators and wheel loaders at the stadium entrance.

In addition, construction equipment dealers in Europe will be invited to attend the match. The company will also post its advertising banners on the Football Association of Wales (FAW) website over the next two weeks.

According to Off-Highway Research, a British research company for construction machinery, the South Korean company ranked third in the UK’s heavy equipment market in 2022.

HD Hyundai Infracore has been diversifying its sales channels into online and TV home shopping platforms, the first heavy industry company to do so in South Korea.

Write to Jae-Fu Kim at hu@hankyung.com
 


Yeonhee Kim edited this article