Hyundai Chongqing plant for sale at $505 million

author: FutureCar Staff    

Hyundai Motor is putting its Chongqing plant in China up for sale at a price of 3.68 billion yuan ($505 million). This decision comes as the Korean automaker adjusts its Chinese business strategy due to declining sales. Additionally, Hyundai's Changzhou plant will also be up for sale within the year, reducing the company's total number of operational factories in China from five to two.

The sale of the Chongqing plant includes the land use rights, equipment, and other facilities, and is being carried out by Beijing Hyundai. However, the details regarding the buyer and the date of the sale have not been confirmed yet, according to a Hyundai spokesperson.

This move follows Hyundai's announcement of its Chinese business reconstruction plan in June, where it sold off its No. 1 Beijing factory in 2021 and ceased operations at the Chongqing and Changzhou plants. The Chongqing plant, a joint venture with Beijing Automotive Group, started production in 2017 with an annual capacity of 300,000 units.

The decision to sell the Chongqing plant is driven by Hyundai's declining sales in China, particularly since 2016 when tensions escalated between Korea and China due to the deployment of the Terminal High Altitude Area Defense system. In 2016, Hyundai Motor and Kia sold approximately 1.8 million vehicles in China, but this number significantly dropped to 909,000 in 2019 and further declined to 339,000 in the past year.

To streamline its operations, Hyundai Motor plans to reduce the number of model lineups from 13 to eight, with a focus on the premium and high-margin Genesis and SUVs. In addition to the plant sale, Hyundai Steel, which supplies automotive steel plates to Hyundai and Kia, is also selling its two Chinese automotive steel plate facilities.

Looking ahead, Hyundai Motor is exploring India and Indonesia as potential manufacturing bases to replace China. In July, the company signed a deal with General Motors India to acquire its manufacturing facility in Talegaon, Maharashtra, which has an annual production capacity of 130,000 units. This acquisition is expected to boost Hyundai's production capacity in India to 1 million units. Hyundai Motor has been steadily expanding its sales in India, ranking second behind leader Maruti Suzuki.

Overall, Hyundai Motor's decision to sell its Chongqing plant and adjust its Chinese business strategy is a response to the decline in sales and geopolitical tensions. By focusing on key markets like India and Indonesia, the company aims to strengthen its position and adapt to changing market dynamics.

By Sarah Chea

FutureCar Staff