South Korean car producer Hyundai Motor has finally chosen the Czech Republic for its new European plant and will invest $961 million to $1.2 billion (CZK23 billion to CZK29 billion) in its new plant in Nosovice in northern Moravia, Hyundai Motor Company V.P Kim In-so announced, adding that the plant should launch production in October 2008 and produce 300,000 cars per year, employ 3,000 people directly and up to 13,000 in supplier companies and services.

Industry minister Milan Urban said the government had already signed the memorandum of understanding on the investment, the largest one so far, with Hyundai, and the agreement would go into effect in mid-May after it has been approved by the cabinet, the Ostrava regional council and Hyundai. Preparatory work on the construction of the factory should begin in mid-2006. According to Urban's estimations, the launch of production at the plant should raise Czech GDP by up to 2.5 percentage points and reduce unemployment in the Ostrava region by 2pps (some earlier estimates pointed to 1.1-1.2pps positive impact on GDP growth).

The agreement between Hyundai and the government will be disclosed only after it has been signed. Urban said that Hyundai could reckon with direct subsidies worth CZK4.3 billion and tax relief worth CZK1.3 billion, and if Hyundai's investment exceeds $1.2 billion, the tax relief might be even higher.

The investment not only involves the construction of the car plant, but also a plant producing gearboxes, which is to produce 600,000 gearboxes per year for the Hyundai sister KIA plant in Zilina, Central Slovakia . According to Kim, the Czech plant would produce new models of cars – 'C' segment vehicles, RV's and SUVs. Hyundai would be the third major car producer to be based in the Czech Republic, after Volkswagen Group's Skoda Auto and the joint venture TPCA.