Hyundai Motor sells Chongqing plant for $505 million

author: FutureCar Staff    

Hyundai Motor is putting its Chongqing plant in China up for sale for $505 million, as the company adjusts its Chinese business strategy amidst declining sales. This move comes as part of Hyundai's plan to reduce its total number of operational factories in China from five to two, with the Changzhou plant also expected to be put up for sale within the year.

The sale of the Chongqing plant includes the land use rights, equipment, and other facilities belonging to Beijing Hyundai, the joint venture between Hyundai Motor and Beijing Automotive Group. However, details about the buyer and the date of the sale have not been confirmed yet, according to a Hyundai spokesperson.

This decision follows Hyundai's announcement of its Chinese business reconstruction plan in June, where it sold off its No. 1 Beijing factory in 2021 and halted operations at the Chongqing and Changzhou plants. The Chongqing plant, which started production in 2017 with an annual capacity of 300,000 units, is a joint venture between Hyundai and Beijing Automotive Group.

The decline in Hyundai's sales in China can be attributed to various factors, including the tensions between Korea and China that arose in 2016 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 in the previous year.

To adapt to the changing market conditions, Hyundai plans to reduce the number of model lineups from 13 to 8, allowing 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.

Looking ahead, Hyundai Motor is exploring India and Indonesia as potential new 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, as the Talegaon plant has an annual capacity of 130,000 vehicles.

Hyundai Motor has been steadily expanding its sales in India in recent years, positioning itself as the second-largest player in the market, just behind Maruti Suzuki.

By Sarah Chea [[email protected]]

FutureCar Staff