Hyundai Motor sells Chongqing plant for $505 million

author: FutureCar Staff    

Hyundai Motor is selling its Chongqing plant in China for $505 million as part of its efforts to restructure its Chinese business amidst 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. The sale includes the land use rights, equipment, and other facilities of the Chongqing plant, which is a joint venture with Beijing Automotive Group.

Hyundai Motor announced its Chinese business reconstruction plan in June, and the sale of the Chongqing plant comes as a continuation of this plan. The decision to sell the plant was made after Hyundai halted operations there a year ago. Originally, Hyundai 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, has an annual production capacity of 300,000 units. However, Hyundai's sales in China have plummeted in recent years, especially after tensions between Korea and China increased in 2016. The deployment of the Terminal High Altitude Area Defense system (Thaad) on Korean soil contributed to this decline. In 2016, Hyundai Motor and Kia sold around 1.8 million vehicles in China, but this number dropped to 909,000 in 2019 and further to 339,000 last year.

As part of its restructuring efforts, Hyundai Motor will also reduce the number of model lineups from 13 to 8, allowing the company to focus on the premium and high-margin Genesis and SUVs. In addition, Hyundai Steel, which supplies automotive steel plates to Hyundai and Kia, is selling its two Chinese automotive steel plate facilities.

Looking ahead, Hyundai Motor is turning its attention to India and Indonesia as potential manufacturing bases to replace China. In July, Hyundai 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 gradually expanding its sales in India in recent years, positioning itself as a close competitor to market leader Maruti Suzuki.

Overall, the sale of the Chongqing plant and the restructuring of Hyundai's Chinese business reflect the company's efforts to adapt to changing market conditions and focus on more profitable segments and markets.

By Sarah Chea [[email protected]]

FutureCar Staff