Hyundai Motor sells Chongqing plant for $505 million

author: FutureCar Staff    

Hyundai Motor is selling its Chongqing plant in China for 3.68 billion yuan ($505 million) as part of its restructuring efforts in the Chinese market. The Korean automaker will also put its Changzhou plant up for sale, reducing 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 sale of the Chongqing plant comes two months after Hyundai announced its Chinese business reconstruction plan. The company had halted operations at the plant 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 started production in 2017, has an annual production capacity of 300,000 units. The decision to sell the plant is a result of Hyundai's declining sales in China, particularly since 2016 when tensions between Korea and China escalated. The deployment of the Terminal High Altitude Area Defense system (Thaad) on Korean soil further strained the relationship between the two countries.

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 339,000 in the previous year. To adapt to the changing market conditions, Hyundai plans to reduce its number of model lineups from 13 to 8, enabling a focus on premium and high-margin vehicles such as the Genesis and SUVs.

In addition to the plant sales, Hyundai Steel, a supplier of automotive steel plates to Hyundai and Kia, is also selling its two Chinese automotive steel plate facilities. As the company looks for alternative manufacturing bases, it is turning its attention to 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.

Hyundai Motor has been steadily expanding its sales in India, closely following the market leader Maruti Suzuki. The company sees India and Indonesia as potential replacements for its operations in China, where sales have been sluggish in recent years.

By restructuring its Chinese business and exploring new manufacturing bases, Hyundai Motor aims to adapt to changing market dynamics and improve its overall performance in the global automotive industry.

Source: Joongang Daily

FutureCar Staff