22nd August 2023 – (Hong Kong) In a strategic move to adapt to intense price competition and sluggish demand in China, Beijing Hyundai Motor has announced the sale of its Chongqing plant, with an initial price tag of 3.68 billion yuan (US$505 million). The South Korean automaker aims to reposition itself in the Chinese market by offloading the land use rights, equipment, and other facilities associated with the plant located in southwestern China’s Chongqing city. The disclosure regarding the sale was made on the China Beijing Equity Exchange on August 11.
Established as a joint venture with Beijing Automotive Group Co, the Chongqing plant commenced production in 2017 and boasted an annual production capacity of 300,000 units.
A spokesperson from Hyundai Motor commented to Reuters, stating, “Hyundai Motor has been implementing various measures to enhance sales performance in China. We intend to bolster our efforts to improve profitability by optimizing the operation of our production lineups.” The spokesperson added that no buyers or timetable for the sale have been determined as of now.
This decision follows Hyundai’s announcement in June to undertake further restructuring of its China business, with a renewed focus on profitability. At the height of its operations, Hyundai had five plants in China, but it sold one of them in 2021. The company plans to eventually operate just two plants, enabling it to streamline production and cater to export demands in emerging markets.
Over the past few years, Hyundai and its affiliate Kia have experienced a significant decline in vehicle sales in China, primarily due to the market’s shift towards electric vehicles. Notably, Tesla was the sole foreign brand to expand its market share in China during the first half of the year, as per Chinese industry data.
The Chinese passenger vehicle market contracted for the second consecutive month in July, as a persistent price war and fragmented government initiatives failed to incentivize consumers.