Hyundai Motor's Chongqing Plant for Sale at $505M

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. The Changzhou plant will also be up for sale within the year, which will reduce 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. The details about the buyer and sale date have not been confirmed yet, according to a Hyundai spokesperson.

This decision comes after Hyundai announced its Chinese business reconstruction plan in June. The Chongqing plant had already halted operations a year ago. Originally, Hyundai Motor had five factories in China, but it sold off its No. 1 Beijing factory in 2021 and stopped operations at the Chongqing and Changzhou plants.

The Chongqing plant, which started 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 been declining, especially since 2016 when tensions between Korea and China increased due to the deployment of the Terminal High Altitude Area Defense system (Thaad) on Korean soil.

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 decreased to 339,000 last year. As part of its restructuring, Hyundai will 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 to the Chongqing plant sale, 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 looking to 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, which will increase Hyundai's production capacity in India to 1 million units per year.

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

By Sarah Chea [[email protected]]

FutureCar Staff