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Hyundai Motor Company has begun construction on its first production plant in Saudi Arabia, marking a major step toward expanding its footprint in the Middle East while supporting the kingdom’s ambitious Vision 2030 industrial diversification agenda.

The South Korean automaker announced on Wednesday that it held a groundbreaking ceremony for its new facility at the King Salman Auto Manufacturing City in King Abdullah Economic City (KAEC), a newly developed hub established by the Saudi government to promote its domestic automotive industry.

The plant will be operated by HMMME (Hyundai Motor Manufacturing Middle East), a joint venture in which Hyundai holds a 30% stake and Saudi Arabia’s Public Investment Fund (PIF) holds the remaining 70%. Once operational in the fourth quarter of 2026, the facility will have the capacity to produce up to 50,000 vehicles annually, including both internal combustion and electric models.

"This groundbreaking marks the beginning of a new era for both Hyundai and Saudi Arabia," said Jang Jae-hoon, Vice Chairman of Hyundai Motor Group. “It lays the foundation for a new chapter in mobility and technological innovation. We hope HMMME will also contribute to nurturing local talent and building mobility development capacity in line with Vision 2030.”

Saudi Arabia’s Vision 2030 is a long-term national strategy aimed at reducing the country’s dependence on oil by diversifying into other sectors such as manufacturing and renewable energy. The new factory is one of the key automotive projects backed by the kingdom’s sovereign wealth fund as part of that strategy.

Jang also addressed concerns that Hyundai’s overseas investments might overshadow domestic commitments. “We absolutely do not believe that global investments come at the cost of domestic ones,” he said. “This year, we plan to invest around 25 trillion won in South Korea. By comparison, we previously announced a 31 trillion won investment in the United States over four years.”

Jang added that Hyundai would continue to expand into areas like artificial intelligence, robotics, and energy alongside mobility. “Saudi Arabia is the most influential market among the Gulf Cooperation Council (GCC) countries, and this plant can serve as a launchpad for further expansion into North Africa,” he said. “Alongside Hyundai, two other firms are also entering Saudi’s auto sector, and we believe our presence will be pivotal in this early phase.”

Hyundai has been experiencing strong growth in the Saudi market. In the first quarter of this year, the company sold 35,000 vehicles, up 25% year-on-year. Its market share has climbed to 16.1%, placing it second after Japan’s Toyota.

Yazeed Al-Humied, Deputy Governor of PIF, said, “HMMME will serve as a key milestone in Saudi Arabia’s automotive industry development. Through our continued partnership with Hyundai, we aim to accelerate the growth of our mobility ecosystem.”