Hyundai Motor sells Chongqing plant for $505 million

author: FutureCar Staff    

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

According to Hyundai Motor, Beijing Hyundai is selling the land use rights, equipment, and other facilities belonging to its Chongqing plant. However, specific details about the buyer and sale date have not been confirmed at this time. The decision to sell the Chongqing plant comes two months after Hyundai announced its Chinese business reconstruction plan in June. Operations at the Chongqing plant were halted a year ago.

Previously, Hyundai Motor had five factories in China, with three in Beijing, one in Chongqing, and one in Changzhou. However, Hyundai sold off its No. 1 Beijing factory in 2021 and ceased operations at the Chongqing and Changzhou plants. The Chongqing plant, which was a joint venture with Beijing Automotive Group, began production in 2017 with an annual capacity of 300,000 units.

The decision to sell the Chongqing plant is a response to Hyundai's plummeting sales in China, particularly after 2016 when tensions between Korea and China escalated due to the deployment of the Terminal High Altitude Area Defense system (Thaad) on Korean soil. In 2016, Hyundai Motor and Kia sold approximately 1.8 million vehicles in China, but this number dropped to 909,000 in 2019 and further declined to 339,000 in 2020.

In order to streamline its operations, Hyundai Motor plans to reduce its number of model lineups from 13 to 8. This will allow the company to focus on its premium and high-margin offerings, such as the Genesis and SUVs. In addition to the Chongqing plant, 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 shifting its manufacturing base from China to countries like India and Indonesia. In July, the company signed a deal with General Motors India to acquire its manufacturing facility in Talegaon, Maharashtra. This acquisition will increase Hyundai's production capacity in India to 1 million units per year. Hyundai Motor has been steadily expanding its sales in India in recent years, closely trailing the market leader, Maruti Suzuki.

Overall, Hyundai Motor's decision to sell its Chongqing plant and adjust its Chinese business strategy reflects the company's efforts to adapt to changing market conditions and focus on more promising opportunities in other regions.

By Sarah Chea [[email protected]]

FutureCar Staff