Hyundai speeds up Africa-Middle East drive with Algeria plant

Hyundai Motor Co. plans to build an auto manufacturing plant in Algeria, the South Korean auto giant’s fourth in Africa, accelerating its expansion across the continent and the Middle East.

According to sources in the auto industry on Friday, Hyundai Motor is seeking to open a completely knocked down (CKD) automotive assembly plant in the African nation by 2027 in partnership with Oman’s Saud Bahwan Group.

The two companies are expected to invest about $400 million in the plant, which will produce compact sport utility vehicles and hatchback cars popular in the region. 

The site, formerly occupied by Volkswagen’s plant, in an industrial park in Sidi Khettab, Relizane Province – about 300 kilometers west of the capital, Algiers – is under consideration.  

Hyundai Motor is seeking final nod for the plant’s construction from the Algerian government by the end of next year, after securing preliminary marketing approval in May through its local unit, SARL Hyundai Motors Manufacturing Algeria.

FOURTH PLANT IN AFRICA

Once completed, the plant, the Korean automaker’s fourth manufacturing base in Africa, would serve as Hyundai Motor’s gateway to the African auto market, where 1.05 million vehicles were sold in 2024, according to the International Organization of Motor Vehicle Manufacturers.

It is expected to cover the entire auto demand across the continent, alongside its existing manufacturing sites in South Africa, Ghana and Ethiopia.

In 2018, Hyundai Motor partnered with Global Group, a major Algerian private industrial group, to build a commercial vehicle plant in Batna, but the plan was scrapped in 2020 amid political turmoil in the country.

Hyundai Motor Group Chairman Chung Euisun has since pushed to re-enter the market, betting on growth prospects in Africa and the Middle East.

FIRST PLANT IN THE MIDDLE EAST

In May, Hyundai Motor broke ground on an auto manufacturing plant, also a CKD facility, in Saudi Arabia, the Korean automaker’s first-ever manufacturing base in the Middle East, with a plan to start rolling out its first vehicle in the fourth quarter of 2026.

Hyundai has established a joint venture with the Public Investment Fund (PIF), Saudi Arabia’s sovereign wealth fund, for the new production facility. The venture, called Hyundai Motor Manufacturing Middle East (HMME), is 70% owned by PIF, with Hyundai holding the remaining 30%.

The plant’s annual production capacity is 50,000 vehicles, including both internal combustion engine and electric vehicles.

Saudi Arabia is the largest auto market in the Middle East, with an annual sales volume of 800,000 units.

With the new plant, Hyundai Motor Group aims to boost total annual car sales in the region from the current 300,000 units to 550,000 units in 2030 with EVs.

As of the second half of this year, Hyundai and Kia’s combined sales in Africa and the Middle East rose 11.9% on-year to 145,000 units.

Write to Gil-Sung Yang at vertigo@hankyung.com
Sookyung Seo edited this article.