Hyundai Motor sells Chongqing plant for $505 million

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【Summary】Hyundai Motor is putting its Chongqing plant in China up for sale at $505 million as part of its restructuring plan. This move comes as Hyundai aims to reduce its operational factories in China from five to two. The Chongqing plant, a joint venture with Beijing Automotive Group, had an annual production capacity of 300,000 units. Hyundai's sales in China have declined significantly in recent years, prompting the company to focus on other markets such as India and Indonesia.

FutureCar Staff Aug 23, 2023 9:16 AM PT

Hyundai Motor sells Chongqing plant for $505 million

Hyundai Motor is selling its Chongqing plant in China for $505 million as part of its efforts to restructure its Chinese business in response to declining sales. The Changzhou plant will also be put up for sale later this year, reducing Hyundai's operational factories in China from five to two. The sale includes the land use rights, equipment, and other facilities of the Chongqing plant, which is a joint venture with Beijing Automotive Group.

The decision to sell the Chongqing plant comes two months after Hyundai announced its Chinese business reconstruction plan in June. Operations at the plant were halted a year ago. Hyundai Motor originally had five factories in China, but it sold off its No. 1 Beijing factory in 2021 and halted operations at the Chongqing and Changzhou plants.

The Chongqing plant, which began production in 2017, has an annual capacity of 300,000 units. However, Hyundai's sales in China have plummeted in recent years, especially after 2016 when tensions between Korea and China increased. The deployment of the Terminal High Altitude Area Defense system (Thaad) in Korea led to a decline in Hyundai's sales in China.

In response to the declining sales, Hyundai plans to reduce its number of model lineups from 13 to 8, focusing on the premium and high-margin Genesis and SUVs. Additionally, Hyundai Steel, which supplies automotive steel plates to Hyundai and Kia, is also selling its two Chinese automotive steel plate facilities.

Looking to the future, Hyundai Motor is shifting its focus to India and Indonesia as new manufacturing bases to replace China. In July, Hyundai signed a deal with General Motors India to acquire its manufacturing facility in Talegaon, Maharashtra. This move is expected to boost Hyundai's production capacity in India to 1 million units.

Hyundai Motor has been gradually expanding its sales in India in recent years, positioning itself as the second-largest player behind Maruti Suzuki. With these strategic moves, Hyundai aims to overcome the challenges in the Chinese market and strengthen its presence in other emerging markets.

Source: Joongang Daily