Hyundai Motor, PIF break ground on Saudi Arabia plant

Hyundai Motor Co. has joined forces with the Public Investment Fund (PIF), Saudi Arabia’s sovereign wealth fund, to build its first manufacturing plant in the Middle East, marking a new step in its expansion in the region and further into Africa.

On Wednesday, the South Korean carmaker broke ground for a plant in Saudi Arabia, describing the project as the foundation for a new era of automotive manufacturing in the Kingdom.

Hyundai has established a joint venture with PIF for the new production facility, Hyundai said on Thursday. The venture, called Hyundai Motor Manufacturing Middle East (HMME), is 70% owned by PIF, with Hyundai holding the remaining 30%.

The plant is expected to roll out its first vehicle by the fourth quarter of 2026 with an annual production capacity of 50,000 vehicles, including both internal combustion engine and electric vehicles.

“Today's groundbreaking marks the beginning of a new chapter for both the Kingdom of Saudi Arabia and Hyundai Motor, as we lay the foundation for a new era of future mobility and technological innovation,” said Chang Jae-hoon, vice chairman of Hyundai Motor Group, in a press release.

The groundbreaking ceremony was held at the King Salman Automotive Cluster and attended by senior officials, including Saudi Industry and Mineral Resources Minister Bandar Ibrahim AlKhorayef and PIF Deputy Governor Yazeed Alhumied.

It will be built on a 400,000-square-metre site, equivalent to the size of 56 football fields.

The new plant aligns with the kingdom’s effort to transform the oil-reliant country into a smart, futuristic nation under the Vision 2030 initiative.

“This groundbreaking is a significant milestone for PIF as it further strengthens the automotive industry in Saudi Arabia. PIF will continue to enable and accelerate the growth of Saudi Arabia’s automotive ecosystem through partnerships,” said Alhumied in the press release.

Hyundai said the new manufacturing plant will create thousands of jobs and allow for knowledge transfer and skills development.

With the new plant, Hyundai expects to be better positioned to capitalize on the Middle East’s transition towards electrification, as its sales in the region continue to grow.

In 2024, sales of Hyundai and its sibling Kia Corp. increased to a combined 199,515 units in Saudi Arabia, compared to 173,295 units a year before, according to Hyundai.

Hyundai unveiled a target at the end of 2023 to raise EV shipments to 15% of its total sales by 2032.

Hyundai expects its localization strategy in the Middle East not only to deepen its presence in the region, but also to provide fresh momentum for its transition toward low-emission mobility.

“Saudi Arabia has shown strong interest in hydrogen produced from petroleum byproducts and fuel cell technology. It has conducted pilot projects over the past two to three years,” Chang told reporters after the groundbreaking ceremony.

Meanwhile, Chang played down concerns that Hyundai's overseas expansion could come at the expense of domestic investment.

“This year alone, we’ll invest 25 trillion won ($18 billion) at home. In the US, we have announced an investment of 31 trillion won over a four-year period,” he told reporters after the groundbreaking ceremony.

Write to Yeonhee Kim at yhkim@hankyung.com
 

Jennifer Nicholson-Breen edited this article.