Indonesia is the biggest market Hyundai is forgoing, an increasingly risky decision as growth in United States auto sales slows and competition intensifies in China. Demand in Indonesia, with twice Japan's 127 million population, is projected to expand faster than in China over the next seven years as a booming economy generates new car buyers.
"At this rate, Hyundai is going to lose not just Indonesia, but all of Southeast Asia," said Kim Pil Soo, a professor of automotive engineering at Daelim College in South Korea and an adviser to the government. "One of Hyundai's biggest problems in Indonesia is lack of appealing models."
Toyota is investing US$1.3 billion to double output in the country whose 250 million people make up almost 40% of Southeast Asia's population and where annual economic growth has not fallen below 4% in a decade. Hyundai says it is allocating resources elsewhere rather than challenging Japanese makers, General Motors Co and India's Tata Motors Ltd.
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