Hyundai sells Chongqing plant

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【Summary】Beijing Hyundai Motor is selling its Chongqing plant in China for $505 million as part of its strategy to improve profitability amid fierce competition and declining demand. The plant, a joint venture with Beijing Automotive Group, started production in 2017 with an annual capacity of 300,000 units. Hyundai plans to optimize its production and focus on exports to emerging markets.

FutureCar Staff Aug 25, 2023 9:35 AM PT

Beijing Hyundai Motor is selling its Chongqing plant in China for a starting price of 3.68 billion yuan ($505 million). The decision comes as the South Korean automaker adjusts its strategy in response to intense price competition and a slowdown in demand in the Chinese market.

The sale includes the land use rights, equipment, and other facilities of the Chongqing plant, which is a joint venture with Beijing Automotive Group Co. The plant began production in 2017 and has an annual capacity of 300,000 units.

A spokesperson for Hyundai Motor stated that the company has been implementing various measures to improve sales performance in China. They also mentioned plans to enhance profitability by optimizing the operation of their production lineups. However, the spokesperson clarified that the buyers and schedule for the sale have not been determined yet.

This move follows Hyundai's announcement 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 aims to eventually operate just two plants, focusing on optimizing production and using them for exports to emerging markets.

Hyundai and its affiliate Kia have experienced a decline in vehicle sales in China over the past few years, largely due to the growing popularity of electric vehicles in the country. In contrast, Tesla was the only foreign brand to increase its market share in China during the first half of the year, according to Chinese industry data.

In July, China's passenger vehicle sales contracted for the second consecutive month. Despite government measures and a price war, consumers remained hesitant to make purchases.

Overall, Beijing Hyundai's decision to sell its Chongqing plant reflects the company's efforts to adapt to the changing dynamics of the Chinese automotive market and improve its profitability.

(Reporting by Qiaoyi Li, Zhang Yan, and Brenda Goh; Additional reporting by Heekyoung Yang)

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