South Korea’s first 3,600-ton-class naval submarine is unveiled during a ceremony held at the Hanwha Ocean dockyard, in Geoje, South Korea, 22 October 2025. This submarine is the first of three planned Changbogo-III Batch-II class submersibles being built under the military’s KSS-III program for advanced diesel-electric attack submarines. File. Photo by YONHAP / EPA
South Korea’s bid for Canada’s next-generation submarine program has expanded beyond a defense competition into a broader contest over industrial investment, increasing pressure on Hyundai Motor Group to consider building a local production base.
The Canadian Patrol Submarine Project, estimated at about 60 trillion won ($45 billion), is scheduled to receive final proposals by March 2, with a preferred bidder expected to be announced in May or June.
Industry officials said Germany has proposed an industrial package that goes beyond submarine technology transfer to include the possible establishment of an automobile production base in Canada. South Korea is also reviewing broader cooperation options that could include manufacturing investment.
The shift reflects Ottawa’s emphasis on economic impact, job creation, cost and delivery timelines as key criteria in its defense procurement decisions, rather than submarine performance alone.
Stephen Pure, Canada’s special envoy for defense procurement, underscored that position during a recent visit to South Korea. Speaking at Hanwha Ocean’s shipyard in Geoje on Feb. 2, he said submarines proposed by both South Korea and Germany meet the Canadian Navy’s core requirements and stressed that economic benefits to Canada would be central to the final decision.
His remarks were widely interpreted in Seoul as signaling that large-scale industrial investment, potentially including automotive production, could influence the outcome.
Kang Hoon-sik, chief of staff to the president, said in a YouTube interview on Feb. 14 that Germany has Volkswagen and South Korea has Hyundai Motor, suggesting each country would need to present what it can offer domestically as part of a broader package.
For Hyundai, however, the business case is uncertain. The company operated a plant in Quebec beginning in 1989 but withdrew after about four years because of productivity challenges and changing market conditions.
Hyundai Motor Group currently sells about 260,000 vehicles annually in Canada, with a market share of roughly 10%. Industry analysts say those figures may not justify the cost and risk of building a new production facility.
Instead, Hyundai has reportedly proposed cooperation centered on developing a hydrogen ecosystem, including collaboration on hydrogen production, transport and utilization technologies, rather than committing to large-scale manufacturing investment.
Chae Woo-seok, chairman of the Korea Defense Industry Association and a retired Army brigadier general, said Canada appears intent on leveraging the submarine program to maximize economic gains, including in the automotive sector.
“At the same time, it would be difficult to compel Hyundai Motor Group to build a production base given the scale of investment and associated risks,” he said.
— Reported by Asia Today; translated by UPI
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Original Korean report: https://www.asiatoday.co.kr/kn/view.php?key=20260219010005863
