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

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【Summary】Hyundai Motor is selling its Chongqing plant in China for $505 million as part of its restructuring plan amid slumping sales. The sale will reduce Hyundai's operational factories in China from five to two. The buyer and date of the sale have not been confirmed. Hyundai's sales in China have been declining since 2016 due to tensions between Korea and China.

FutureCar Staff Sep 03, 2023 4:35 PM PT

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

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 due to declining sales. Additionally, Hyundai's Changzhou plant will also be up for sale within the year, resulting in a reduction of Hyundai's operational factories in China from five to two.

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

This decision follows Hyundai's Chinese business reconstruction plan announced in June, which involved selling off the No. 1 Beijing factory in 2021 and halting operations at the Chongqing and Changzhou plants. The Chongqing plant, established in 2017, had an annual production capacity of 300,000 units.

The decline in Hyundai's sales in China can be attributed to various factors, including the tensions between Korea and China 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 decreased to 339,000 in the previous year.

As part of its restructuring efforts, Hyundai will be reducing its model lineups from 13 to 8, focusing 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.

Looking ahead, Hyundai Motor is shifting its focus to India and Indonesia as 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, as the Talegaon plant has an annual production capacity of 130,000.

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

By Sarah Chea [[email protected]]