Hyundai Motor's Chongqing Plant Up for Sale

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 company also plans to sell its Changzhou plant within the year, which will reduce its total number of operational factories in China from five to two.

The sale of the Chongqing plant includes the land use rights, equipment, and other facilities. However, details about the buyer and the date of the sale have not been confirmed yet, according to a Hyundai spokesperson.

This announcement comes two months after Hyundai revealed its Chinese business reconstruction plan in June. The Chongqing plant had ceased operations a year ago. Previously, Hyundai Motor had five factories in China, with three in Beijing, one in Chongqing, and one in Changzhou. The No. 1 Beijing factory was sold off in 2021, and operations were halted at the Chongqing and Changzhou plants.

The Chongqing plant, which was a joint venture with Beijing Automotive Group, started production in 2017 with an annual capacity of 300,000 units. However, Hyundai's sales in China have declined significantly, particularly after 2016 when tensions between Korea and China escalated 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. However, this number dropped to 909,000 in 2019 and further decreased to 339,000 in the previous year. As a result, Hyundai plans to reduce its 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. Looking ahead, Hyundai Motor is now considering India and Indonesia as potential new manufacturing bases to replace China.

In July, Hyundai Motor signed a deal with General Motors India to acquire its manufacturing facility in Talegaon, Maharashtra. This acquisition includes the plant itself and some of the machinery and manufacturing equipment. The Talegaon plant has an annual production capacity of 130,000 units, which will significantly increase Hyundai's production capacity in India to 1 million units.

Hyundai Motor has been gradually expanding its sales in India in recent years, positioning itself just behind the market leader Maruti Suzuki. This information is based on data from the Society for Industrial and Applied Mathematics. With these strategic moves, Hyundai aims to navigate the challenging Chinese market while exploring new opportunities in India and Indonesia.

By Sarah Chea [[email protected]]

FutureCar Staff