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 due 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. Beijing Hyundai is selling the land use rights, equipment, and other facilities of the Chongqing plant.

According to a Hyundai spokesperson, the details about the buyer and date of the sale have not been confirmed yet. This sale comes two months after Hyundai announced its Chinese business reconstruction plan in June. The Chongqing plant had ceased operations a year ago. Previously, Hyundai Motor had five factories in China, with three in Beijing, one in Chongqing, and one in Changzhou. The No. 1 Beijing factory was sold off in 2021, and operations were halted at the Chongqing and Changzhou plants.

The Chongqing plant, which is a joint venture with Beijing Automotive Group, started production in 2017 and had an annual production capacity of 300,000 units. The decision to sell the plant is driven by Hyundai's declining 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) in Korea.

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. As Hyundai looks to replace its manufacturing base in China, it is now focusing on 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 boost Hyundai's production capacity in India to 1 million units, as the Talegaon plant has an annual production capacity of 130,000.

With the aim of streamlining its operations, Hyundai Motor plans to reduce the number of model lineups from 13 to 8. This will allow the company to concentrate on the premium and high-margin Genesis and SUVs. Despite the challenges in China, Hyundai has been steadily expanding its sales in India, positioning itself as the second-largest automaker behind Maruti Suzuki.

Overall, these strategic moves reflect Hyundai Motor's efforts to adapt to changing market dynamics and focus on growth opportunities in different regions.

FutureCar Staff