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 plans to sell its Changzhou plant within the year, which will reduce its total number of operational factories in China from five to two.

Beijing Hyundai, a joint venture between Hyundai Motor and Beijing Automotive Group, is selling the land use rights, equipment, and other facilities of its Chongqing plant. The details regarding the buyer and sale date have not been confirmed yet, according to a Hyundai spokesperson.

This decision follows Hyundai's announcement of its Chinese business reconstruction plan in June. The Chongqing plant had already ceased operations a year ago. Previously, Hyundai Motor had five factories in China, with three in Beijing, one in Chongqing, and one in Changzhou. In 2021, Hyundai sold off its No. 1 Beijing factory and halted operations at the Chongqing and Changzhou plants.

The Chongqing plant, which started production in 2017 as a joint venture with Beijing Automotive Group, had an annual production capacity of 300,000 units. However, Hyundai's sales in China have plummeted in recent years, 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. However, this number dropped to 909,000 in 2019 and further declined to around 339,000 last year. As a result, Hyundai plans to reduce its number of model lineups from 13 to 8, focusing on the premium and high-margin 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. As Hyundai looks for alternative manufacturing bases, it is now eyeing India and Indonesia.

In July, Hyundai Motor 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, as the Talegaon plant has an annual production capacity of 130,000 units. Hyundai has been steadily expanding its sales in India and is currently the second-largest automaker in the country, following Maruti Suzuki.

Overall, Hyundai Motor's decision to sell its Chongqing plant and adjust its Chinese business strategy reflects the challenges it has faced in the Chinese market. By focusing on premium models and exploring new manufacturing bases such as India and Indonesia, Hyundai aims to adapt to changing market dynamics and regain its competitive edge.

Source: Sarah Chea

FutureCar Staff