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 put up for sale within the year, resulting in a reduction of Hyundai's 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. However, the details regarding the buyer and sale date have not yet been confirmed, according to a Hyundai spokesperson.

The decision to sell the Chongqing plant comes two months after Hyundai announced its Chinese business reconstruction plan in June. The Chongqing plant had ceased operations a year ago. Previously, Hyundai 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 at the Chongqing and Changzhou plants were halted.

The Chongqing plant, which began production in 2017, was a joint venture with Beijing Automotive Group and 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, but this number significantly dropped to 909,000 in 2019 and further declined to 339,000 last year. As a result, Hyundai plans to reduce its number of model lineups from 13 to 8, allowing the company to focus on its 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. Meanwhile, Hyundai Motor is shifting its focus to India and Indonesia as potential new manufacturing bases to replace China. 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, as the Talegaon plant has an annual production capacity of 130,000.

Hyundai Motor has been gradually expanding its sales in India, ranking second behind Maruti Suzuki, according to data from the Society for Industrial and Applied Mathematics.

By Sarah Chea [[email protected]]

FutureCar Staff