Hyundai Motor's Chongqing plant listed for sale at $505 million

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. In addition, Hyundai's Changzhou plant will also be up for sale within the year, reducing the company's operational factories in China from five to two.

The sale of the Chongqing plant includes the land use rights, equipment, and other facilities, and is being carried out by Beijing Hyundai, a joint venture with Beijing Automotive Group. However, specific details about the buyer and 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. The Chongqing plant had ceased operations a year ago, and Hyundai had previously sold off its No. 1 Beijing factory in 2021. With this latest sale, Hyundai's production capacity in China will be significantly reduced.

The decline in Hyundai's sales in China can be attributed to various factors, including tensions between Korea and China that arose in 2016 due to the deployment of the Terminal High Altitude Area Defense system. As a result, Hyundai Motor and Kia saw a significant drop in vehicle sales in China, from 1.8 million in 2016 to 909,000 in 2019 and further down to 339,000 in the previous year.

To adapt to the changing market conditions, Hyundai Motor plans to streamline its model lineups, reducing them from 13 to 8. This will allow the company to focus on its premium and high-margin vehicles, such as the 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 focus to India and Indonesia as potential manufacturing bases to replace China. 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 vehicles per year. Hyundai Motor has been steadily expanding its sales in India, closely trailing the market leader, Maruti Suzuki.

In summary, Hyundai Motor's decision to put its Chongqing plant up for sale is part of its efforts to restructure its Chinese business amid declining sales. The company is adjusting its manufacturing strategy and exploring new markets such as India and Indonesia to maintain its global presence and boost sales.

Source: JoongAng Daily

FutureCar Staff