Poor Sales Force Hyundai Motor, Kia Motors to Execute Massive Layoffs in China

Last year, Hyundai Motor reduced the number of its workforce in China by about 1,000 as its sales in China remained sluggish. Kia Motors also laid off 300 employees in China during the same period.

According to the sustainability reports of the two companies, Hyundai Motor reduced its employees in China by 5.07 percent (968) in 2018. In the same period, Kia Motors cut back on its payroll in China by 5 percent (307). The two automakers laid off more employees in China than in any other countries including Korea, the United States, European countries and Mexico.

Last year, Hyundai Motor cut 210 employees (2.11 percent) in Europe, while Kia Motors fired 287 employees (8.74 percent) in the United States.

On the other hand, Hyundai Motor increased its employees in other areas such as Korea (1.28 percent), North America (3.56 percent), India (0.05 percent) and others (39.94 percent) Kia Motors additionally hired employees in Korea (2.56 percent), Europe (3.39 percent), Mexico (2.93 percent) and others (100.4 percent).

Hyundai’s and Kia's massive layoffs in China are blamed on sluggish sales in China. Hyundai's Chinese sales which surpassed 1 million units before the THAAD incident in 2017 fell to 785,000 units in 2017 and stood at 790,000 units last year. Kia's sales volume in China last year was 370,000 units, about half of 650,000 units in 2016.

Since the beginning of this year, Kia and Hyundai have been struggling in China. Sales of Hyundai's Chinese joint venture, Beijing Hyundai Motor, stood at 36,035 units in May, down 40.4 percent from the same month last year, industry sources said. By the end of May this year, Hyundai’s cumulative sales in China amounted to 217,136 units, down 25.9 percent from the same period last year.

Continued sluggish sales compelled Hyundai and Kia to make a decision to shut down their factories in China. In April, Beijing Hyundai halted the operation of its first plant in Beijing, while Dongfeng Yueda Kia’s Yancheng 1 plant in Jiangsu Province, China, will be leased to the Yueda Group which is Kia’s partner in China for a long time. Both are their first factories in China.

Based on current situations, a forecast is made that massive employee cuts will inevitably take place in 2019 following last year. In the first half of this year, Hyundai Motor's sales in the world market shrank to 2,127,611 units, down 5.1 percent from the same period of last year and Kia Motors’ sales fell 2.4 percent to 1,353,011 units in the world market. The declines in sales were largely due to their shrinking sales in emerging countries including China.