Chengzhou to Also Halt Operations Within Year
Hyundai Motor has started the process of selling its Chongqing factory in China, which has been non-operational for over a year. This is the second such move after it sold its Beijing 1 factory in 2021. Hyundai also plans to halt operations and prepare for the sale of its Chengzhou factory, one of the three remaining factories in China, within the year.
According to foreign reports on Aug. 23, Hyundai’s joint venture in China, Beijing Hyundai Motor Co., listed its Chongqing factory for 36.8435 billion yuan (approximately 6.8 trillion won) on Aug. 11. This comes roughly a year and a half after the factory halted operations. Previously, due to a prolonged downturn in the Chinese market, Hyundai, which primarily produced small cars at its Chongqing factory, fully suspended its operations.
The Chongqing factory, the fifth of its kind built by Hyundai in China in 2017, had an investment of approximately 1.6 trillion won. It has a capacity to produce 300,000 cars annually. Hyundai, which had three factories in Beijing, pledged to write “a second success story in China” and completed factories 4 and 5 in Chengzhou and Chongqing respectively during 2016-2017. This increased their annual passenger car production capacity to 1.65 million. Following sales of 1.13 million units in 2016, they significantly boosted their production capacity. However, due to the Chinese government’s retaliatory measures over the THAAD issue in 2017, sales plummeted. From 1.79 million units in 2016, sales dropped to just over 500,000 units in 2021. Consequently, Hyundai sold the Beijing 1 factory in 2021 and also halted operations at the Chongqing factory. Sales further decreased to 400,000 units last year, and while there was a rebound in the first half of this year, total sales were just 123,259 units, capturing a market share of only 1.2%.
Following Hyundai’s footsteps, domestic suppliers who also expanded to Chongqing are winding down their operations. Hyundai Steel is set to sell its Chongqing branch after its Beijing one. Auto parts makers Hyundai KEFICO and HL Mando also recently sold all of their stake in their Chongqing affiliates.
This year, Hyundai plans to stop operations and put the Chengzhou 4 factory up for sale. The industry estimates the plant’s operating rate at around 30%. Hyundai’s two remaining Beijing factories will undergo efficiency measures and will focus on producing luxury brand Genesis and SUVs.
Hyundai is eyeing India as a replacement market for China. Having recently acquired General Motors’ (GM) factory in India, they are expanding their investment in India, which has emerged as one of the top three global automotive markets. Last May, in collaboration with the state of Tamil Nadu, Hyundai agreed to invest 200 billion rupees over the next ten years in establishing a battery pack assembly plant, installing fast chargers, fostering an EV ecosystem, and modernizing production facilities.