South Korean automaker Hyundai has sold yet another plant in China. The Chongqing factory is sold to Chongqing Liangjiang New Area Yufu Industrial Park Construction Investment Co., Ltd. for 1.62 billion yuan ($226 million), a figure less than half of its initial listing price.
The Chongqing factory, the fifth complete car manufacturing plant established by the Beijing Hyundai joint venture in China, was touted as the company’s “most advanced” factory. Construction began in 2015, and the factory officially commenced operations in August 2017. Covering an area of 1.87 million square meters, the factory had a total investment of 7.7 billion yuan ($1.07 billion) and an annual production capacity of 300,000 vehicles. However, due to various reasons, it ceased operations in December 2021.
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According to Hyundai, the sale is part of an effort to reasonably adjust the operational model of its factories in China to enhance efficiency. Data reveals that Hyundai sales in China peaked at 1.14 million vehicles in 2016. However, since facing marketing setbacks in China in 2017, the company sold its first factory in Beijing in 2021. Now the latest sale has reduced Hyundai’s manufacturing presence in China from five to three factories.
In 2023, Hyundai sold around 257,000 vehicles in China and has revealed plans to develop over 6 pure electric and plug-in hybrid products within the next three years, which, in addition to the introduction of new models including the 5th-generation Shengda in 2024 will help Hyundai regain its lost sales momentum in the Chinese market.
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Hyundai, as well as its sister company Kia, are both suffering from diminishing sales in the world’s largest car market, resulting in overcapacity, shrinking business, and a bulk of unsold units to deal with. To alleviate the problem, Kia exported half of the cars produced in China to other parts of the world, in order to cope with the decline in demand in the Chinese market.
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