Hyundai Motor sells Chongqing plant for $505 million

author: FutureCar Staff    

Hyundai Motor's Chongqing plant in China is currently up for sale at a price of 3.68 billion yuan ($505 million). This move comes as the Korean automaker adjusts its Chinese business strategy in response to declining sales. In addition to the Chongqing plant, 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.

According to Hyundai Motor, Beijing Hyundai is selling the land use rights, equipment, and other facilities associated with its plant in Chongqing. However, the details regarding the buyer and the date of the sale have not yet been confirmed, as stated by a Hyundai spokesperson.

This decision to sell the Chongqing plant comes two months after Hyundai announced its Chinese business reconstruction plan in June. Operations at the Chongqing plant were halted by Hyundai a year ago. Initially, Hyundai Motor had a total of five factories in China, three in Beijing, one in Chongqing, and one in Changzhou. However, Hyundai sold off its No. 1 Beijing factory in 2021 and also ceased operations at the Chongqing and Changzhou plants.

The Chongqing plant, which was a joint venture with Beijing Automotive Group, commenced production in 2017 and had an annual production capacity of 300,000 units.

Hyundai's sales in China have been severely impacted, especially since 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 dropped to 909,000 in 2019 and further declined to 339,000 last year.

To adapt to the challenging market conditions, Hyundai Motor plans to reduce the number of model lineups from 13 to 8. This will allow the company to focus 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.

In search of new manufacturing bases, Hyundai Motor is now considering India and Indonesia as potential replacements for China. In July, Hyundai Motor signed an agreement with General Motors India to acquire its manufacturing facility in Talegaon, Maharashtra. This acquisition includes the plant itself, as well as some of the machinery and manufacturing equipment. The Talegaon plant has an annual production capacity of 130,000 units, which is expected to significantly boost Hyundai's production capacity in India to 1 million.

Hyundai Motor has been gradually expanding its sales in India in recent years, positioning itself just behind the market leader, Maruti Suzuki.

By Sarah Chea [[email protected]]

FutureCar Staff