Hyundai Motor and Toyota, two major players that have been struggling in the world’s largest automobile market, China, are taking different paths. Hyundai Motor has recently considered outsourcing local car brand production as it played its “sell Chinese factories” card. On the other hand, Toyota has successfully rebounded in just four months, driven by its promotional efforts.
According to Reuters on Oct. 15, Hyundai’s Chinese subsidiary, Beijing Hyundai Motor, is in discussions to produce the “Arcfox” electric vehicle model from China’s Beijing Automotive Industry Group (BAIC) in its own factory. This represents the first time for Hyundai Motor to produce a Chinese car brand.
Specific details have not yet been disclosed, but it appears that Beijing Hyundai is likely to take responsibility for the design, production, and quality control of Arcfox. The production facility mentioned is the Beijing 3 factory, which is capable of producing up to 450,000 units annually. A Beijing Hyundai Motor official stated, “We are currently considering various measures for electric vehicle production.”
Industry experts analyze that Hyundai Motor has chosen a workaround strategy of producing vehicles for another brand, rather than producing its own electric vehicles like the IONIQ locally, to overcome its difficulties in the Chinese market.
Motivated by sluggish local sales, the Chongqing plant, which is pushing for sale, reduced the minimum bidding price by 30 percent in just over a month. However, no suitable buyer emerged despite the reduction, leading to a second decrease in the bidding price by 12.8 percent in about two weeks. According to the Beijing Financial Assets Exchange in China, the minimum bidding price for Hyundai’s Chongqing plant now stands at 2.25 billion yuan (US$307.6 million), which is 39 percent lower than the initial listing price of 3.68 billion yuan (US$503.96 million). The Chongqing plant is Hyundai Motor’s fifth local production hub, which was constructed with an investment of 1.6 trillion won (US$1.18 billion) in 2017.
While Hyundai is diligently working on its recovery plan, Toyota made a remarkable comeback in just four months. According to the China Passenger Car Association (CPCA), Toyota’s sales in September increased by 2 percent compared to the same period last year, reaching 176,000 units, marking its first upward trajectory since June.
As the company intensifies sales efforts, primarily focusing on compact sports utility vehicles (SUVs), most of its vehicles have shown an upward trend. Moreover, the cumulative order volume for the midsize electric sedan “bZ3,” developed in collaboration with the local electric vehicle manufacturer BYD, has now exceeded 20,000 units.
However, Japan’s Nihon Keizai Shimbun has quoted Mitsubishi Motors’ recent decision to withdraw from Chinese factories and suggested the possibility of the entire Japanese automotive industry, including Toyota, reevaluating its operational strategy in the Chinese market.
In fact, both Toyota and Honda saw an increase in their new car sales in China for September, but their cumulative sales figures are showing a declining trend. Toyota’s cumulative sales from January to September decreased by 4 percent compared to the same period last year, while Honda witnessed a 21 percent decrease. Nissan, which has exited its Chinese operations, saw a 26 percent reduction in its cumulative sales volume.