Korean automaker reduces presence in China
Hyundai Motor’s Asian business focus appears to move from China to India as the South Korea’s leading automaker is selling off its facilities in the former country.
Hyundai Motor said on Aug. 23 that the corporation had put its Chongqing plant up for grabs at around $500 million amid sluggish sales in the world’s most populous nation.
The plant in the southwestern Chinese city started rolling out vehicles in 2017, but Hyundai Motor halted its operation last year. It has an annual capacity of 300,000 cars.
The move is in line with Hyundai Motor’s restructuring plan in China, which was announced in June due to the disappointing performances there.
In 2016, Hyundai Motor and its sister brand Kia sold 1.8 million cars in China, but the yearly figure kept going down to 900,000 in 2019 and 340,000 last year.
Originally, Hyundai Motor ran five plants in China _ three in Beijing, one in Chongqing, and one in Changzhou. But the number is expected to reach two by the end of this year.
The Seoul-based company already disposed of one of its Beijing plants in 2021 and is set to sell the Changzhou factory, which is also not operational, on top of the Chongqing facilities.
As an alternative to China, Hyundai is turning its eyes to India.
Last month, the firm inked a deal with General Motors to purchase the latter’s manufacturing facility in Talegon, India, about 720 miles southwest of New Delhi.
With the acquisition, Hyundai is projected to jack up its annual capacity in India from 820,000 units to almost 1 million.
“The sales of Hyundai vehicles started plunging in 2016 when tensions between Seoul and Beijing surfaced due to the deployment of the Terminal High Altitude Area Defense System in Korea,” Prof. Kim Pil-soo at Daelim University said.
“Against this backdrop, it’s a natural measure to focus on India where the company sees increasing sales. Hyundai would keep caring more about the Indian market instead of China.”
He said that other global automakers, including Volkswagen and Toyota, were also decreasing their presence in China.