To Expand Electric Vehicle Sales
Hyundai Motor Co. has decided to inject 1 trillion won worth of capital into its Chinese joint venture company, which has been losing billions of dollars every year.
Beijing Hyundai, a joint venture between Hyundai Motor Co. and BAIC of China, said on March 20 that it lost 6.28 billion yuan (about 1.2 trillion won) and 5 billion yuan (about 950 billion won) in 2020 and 2021, respectively. Its losses over two years exceeded two trillion won. Accordingly, Beijing Hyundai has decided to ramp up capital by US$942.18 million to expand its electric vehicle business.
Beijing Hyundai was established in October 2002 with an initial capital of US$2.036 billion, which was equally shared by Hyundai Motor and BAIC. Their partnership period is 30 years. However, Beijing Hyundai has been suffering from worsening business conditions. Its sales peaked at 1.14 million units in 2016, but have since declined rapidly. In 2021, sales totaled 385,000 units, a mere 55.4 percent of the annual target of 560,000 units set at the beginning of the year.
As its sales slipped, production at factories affiliated with Beijing Hyundai is also shrinking. Beijing Hyundai can produce 1.65 million cars a year at five plants -- Beijing Shunyi Plants 1, 2 and 3, Hebei Changzhou Plant and Chongqing Plant. Among them, Beijing Shunyi Plant 1 was sold to Chinese electric vehicle company Li Auto. The remaining plants' combined production capacity is 1.35 million cars. However, the company's actual sales volume is only 26.7 percent of its production capacity, sources say.
Since Hyundai Motor and BAIC currently own Beijing Hyundai 50:50, the equity structure will remain the same even after the capital increase.