Hyundai sells Chongqing plant at $227 mn for China restructuring

Hyundai Motor Co. has sold its plant in Chongqing for $227 million as the leading South Korean carmaker continues restructuring its business to survive in China with a plan to sell another factory in the world’s largest auto market, company officials said on Tuesday.

Beijing Hyundai Motor Co., a joint venture between Hyundai and BAIC Motor Corp., sold the Chongqing plant for 1.62 billion yuan ($227.3 million) to Yufu Industrial Complex Construction Co. based in the southwestern city at the end of last year, according to the officials.

The buyer’s top shareholder Chongqing Liangjiang New Area Development & Investment Group Co. reportedly plans to renovate the factory for one of its subsidiaries to manufacture electric vehicles.

Hyundai put the plant with an annual capacity of 300,000 vehicles up for sale in 2023 intending to unload the factory’s land use rights, equipment and other facilities at 3.68 billion yuan.

The South Korean company was known to plan to sell another plant in Changzhou, according to industry sources in Seoul.

“We are trying to boost business efficiency in China for a better business structure,” said a Hyundai official. “The sale of the Chongqing plant is part of our efforts to improve profitability by rationalizing production management.”

THREE FACTORIES LEFT OUT OF FIVE

Hyundai has built five factories in China since it entered the market in 2002 – three in Beijing, one in Changzhou and another in Chongqing. The maker of the Elantra compact car already sold one of the plants in the Chinese capital in 2021 as sales tumbled.

Hyundai, which sold as many as 1.14 million units in the country in 2016, has been struggling there as customers avoided the company’s cars amid a diplomatic row between Beijing and Seoul over South Korea’s deployment of a US-led Terminal High Altitude Area Defense (THAAD) anti-missile system.

Local drivers also shunned Hyundai as it sold only electrified versions of existing internal combustion engine cars, not models based on dedicated EV platforms.

In 2022, the company’s market share dropped to less than 1%.

To revive its Chinese business, Hyundai agreed to manufacture EVs of Arcfox, a clean vehicle brand owned by BAIC, at one of the Beijing plants, industry sources said last year.

The South Korean automaker scrapped a plan to introduce its IONIQ models, dedicated EVs built on Hyundai Motor Group’s platforms for the eco-friendly vehicles, to China due to fierce competition against local makers.

Write to Nan-Sae Bin at binthere@hankyung.com
 
Jongwoo Cheon edited this article.