Hyundai Motor sells Chongqing plant for $505 million

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【Summary】Hyundai Motor is selling its Chongqing plant in China for $505 million as it adjusts its business in response to declining sales. The sale is part of Hyundai's Chinese business reconstruction plan, and the Changzhou plant will also be sold in the future. This will reduce Hyundai's operational factories in China from five to two. Hyundai halted operations at the Chongqing plant a year ago due to decreased sales.

FutureCar Staff Aug 30, 2023 4:47 PM PT

Hyundai Motor sells Chongqing plant for $505 million

Hyundai Motor is selling its Chongqing plant in China for 3.68 billion yuan ($505 million) as part of its efforts to restructure its Chinese business. 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, the joint venture between Hyundai Motor and Beijing Automotive Group, is selling the land use rights, equipment, and other facilities of the Chongqing plant.

The sale of the Chongqing plant comes after Hyundai announced its Chinese business reconstruction plan in June. The plant had ceased operations 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, 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. The deployment of the Terminal High Altitude Area Defense system (Thaad) on Korean soil strained the relationship between the two countries. As a result, Hyundai and Kia's vehicle sales in China dropped significantly from 1.8 million in 2016 to 339,000 in 2020.

To address the decline in sales, Hyundai Motor 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 ahead, Hyundai Motor is shifting its manufacturing base from China to India and Indonesia. In July, the company 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. Hyundai has been steadily expanding its sales in India, ranking second behind Maruti Suzuki.

Overall, Hyundai Motor's decision to sell its Chongqing plant and restructure its Chinese business is a response to the challenging market conditions in China and a strategic move to focus on other markets such as India and Indonesia.

Source: SARAH CHEA [[email protected]]