Increasing Concerns
According to industry sources, the Hyundai Motor Group sold 76,010 cars in China last month, down 39% from a year earlier. Hyundai Motor Company’s sales volume fell 35.4% year on year to 53,008 and Kia Motors’ sales volume fell 45.4% to 23,002 during the same period. For the first eight months of this year, the group’s sales volume in China totaled 576,974, down 44.7% from a year ago.
Under the circumstances, conflict between the group and BAIC is on the rise. At present, they are jointly running Beijing Hyundai in China. The China-based Global Times reported on September 6 that BAIC is planning to end its partnership with the group and Beijing Hyundai, saying that BAIC asked the group to replace auto parts suppliers working with Beijing Hyundai with Chinese companies for cost reduction and the group turned down the request. It added that the two partners’ conflict has been going on since the establishment of the joint venture in 2002 and come to the surface these days with a decline in the sales volume of Beijing Hyundai.
After THAAD deployment in South Korea, BAIC put pressure on partner firms, saying it would make payments only after they cut the prices of their products. As a result, Beijing Hyundai had to shut down its factories four times. The overdue payments began to be made on September 13, but the same can be repeated at any time.
Rumor has it that the Hyundai Motor Group will withdraw from the Chinese market in the near future. However, the group denied the rumor. “China is our largest market, where our annual sales volume amounts to two million cars, and we are not planning to withdraw from it,” it said, adding, “Termination of the partnership does harm to ourselves and BAIC alike in view of our proportion in the joint venture on the software side including design.”