Hyundai sells Chongqing plant

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【Summary】Beijing Hyundai is selling its Chongqing plant in China for $505 million, as it adjusts its strategy due to intense price competition and slowing demand. The plant, a joint venture with Beijing Automotive Group, began production in 2017 with a capacity of 300,000 units. Hyundai aims to improve profitability by optimizing its production lineups and had previously announced plans to restructure its China business. The sale does not have any confirmed buyers or schedule at this time.

FutureCar Staff Aug 26, 2023 4:50 PM PT

Beijing Hyundai Motor is selling its Chongqing plant in China for a starting price of 3.68 billion yuan ($505 million) as part of its strategy to adapt to the challenging market conditions and declining demand. The sale includes the land use rights, equipment, and other facilities of the plant, which is a joint venture with Beijing Automotive Group Co. The Chongqing plant started production in 2017 with an annual capacity of 300,000 units.

A spokesperson for Hyundai Motor stated that the company has been implementing various measures to improve its sales performance in China. They also mentioned plans to enhance profitability by optimizing the operation of their production lineups. However, no buyers or schedule for the sale have been decided at this time.

This decision comes after Hyundai announced in June that it would further restructure its China business to prioritize profitability. At its peak, Hyundai had five plants in China but has already sold one in 2021. The company intends to eventually operate only two plants, focusing on optimizing production for exports to emerging markets.

Hyundai and its affiliate Kia have faced challenges in China due to declining vehicle sales, primarily driven by the shift towards electric vehicles. In contrast, Tesla is the only foreign brand that has managed to increase its market share in China during the first half of the year, according to industry data.

In July, China's passenger vehicle sales contracted for the second consecutive month, as a price war and government measures failed to incentivize consumers. The market conditions have been challenging for many automakers, leading companies like Beijing Hyundai to reassess their strategies and make necessary adjustments.

Overall, Beijing Hyundai's decision to sell its Chongqing plant reflects its efforts to adapt to the changing market landscape in China and improve profitability. By optimizing its production lineups and focusing on emerging markets, the company aims to strengthen its position in the highly competitive Chinese automotive industry.