Hyundai Motor to sell Chongqing plant in China

Hyundai Motor Co.’s Changzhou plant in China. [Courtesy of Hyundai Motor]

South Korean automaker Hyundai Motor Co. has recently embarked on a sale of its production facility in Chongqing and plans to sell another factory in China by this year as it speeds up restructuring in the world’s largest automobile market.

According to multiple sources from the auto industry on Wednesday, Beijing Hyundai Motor Co., a joint venture between BAIC Motor and Hyundai Motor, has offered its Chongqing plant and the land for sale at 680 billion won ($511.6 million). The sale comes six years after it completed the construction in 2017 with an annual capacity of 300,000 units.

The Chongqing plant had produced mainly Chinese-only models, such as the All-New Reina. The plant, however, suspended operations due to sluggish sales that have begun since the end of 2021.

“No details have been confirmed yet,” said an unnamed official from Hyundai Motor.

The automaker also plans to sell its Changzhou plant, a facility that was idled during the first half of this year. The Changzhou plant, built in 2016, was the company’s fourth production facility in China and its first plant located outside Beijing. Its production output per year amounts to 300,000 units.

The Korean automaker first sold its Beijing 1 plant in 2021. The sales of the Chongqing and Changzhou plants will result in the automaker operating only two plants in Beijing - Beijing 2 with an annual capacity of 300,000 units and Beijing 3 with an annual capacity of 450,000 units.

Hyundai Motor’s annual production output in China once amounted to 1.65 million units when all five plants were in operation. However, the capacity shrank to 254,000 units last year, following a plunge in annual sales.

Sluggish sales are due to the conflict from Korea’s deployment of U.S. THAAD system, intensifying rivalry between Hyundai Motor and Chinese automakers, and China’s border shutdown during the pandemic. Hyundai’s market share in China was merely 1.7 percent.

“At the two remaining plants, our focus will be on enhancing production efficiency, augmenting exports to emerging markets through the production of global models,” Chang Jae-hoon, chief executive officer of Hyundai Motor, said in June.

While reducing its Chinese-only models to 8 from the current 13, Hyundai Motor will promote the sales of high-end models and sport utility vehicles (SUVs), such as Genesis. In addition, the automaker aims to promote the sale of high-performance N-brand models, prominently featuring the New Elantra with a primary emphasis on the Shanghai market.

Hyundai Motor is also engaged in the sale of its St. Petersburg plant in Russia, which stopped operations after the Russian-Ukrainian war.

Hyundai Motor, however, is ramping up production in India. The automaker signed a memorandum of understanding with General Motors Co. India to acquire the assets of the Talegaon plant. Hyundai Motor is expected to bring its total production capacity in India to up to 1 million units.