In the Nov. 29, 2021, file photo, Hyundai’s IONIQ 5 is on display at the showroom of an exhibition event for imported vehicles in China. (Yonhap)
SEOUL, Feb. 22 (Korea Bizwire) — Hyundai Motor Co., South Korea’s top automaker, has temporarily shut down its key plant in southwestern China, the company said Tuesday, amid sluggish sales in one of the world’s largest markets.
The factory in the southwestern city of Chongqing has suspended its operations since the beginning of this year in a temporary measure as part of wider efforts to enhance production efficiency amid tough market competition, Hyundai said.
“The Chongqing factory is a small car-oriented factory, and we have temporarily halted its operation as we have stopped producing small vehicle models under the strategy of enhancing the efficiency of and upgrading our product lineups,” the automaker said in a statement to Yonhap News Agency.
“We are pursuing and planning various measures to tide over the slump,” it added.
Chinese news outlet Yicai Global reported earlier that most of the workers have been placed on leave due to the shutdown, citing unidentified insider sources.
The Chongqing plant is one of the four factories run by Beijing Hyundai, the joint venture between Hyundai Motor and China’s BAIC Motor, along with two factories in Beijing and another in Changzhou.
Beijing Hyundai spent about 1.6 trillion won (US$1.3 billion) to build the Chongqing factory in 2017. The plant, which has an annual production capacity of 300,000 units, has mostly produced localized Hyundai models, such as the Verna and Encino.
Hyundai’s sales in China have been on a decline since 2016, when they peaked at 1.14 million units. Sales fell to about 385,000 units in 2021.
The combined market share of Hyundai and its smaller affiliate Kia Corp. tumbled to 1.7 percent last year from 7.35 percent in 2016.
Market watchers have cited Beijing’s economic retaliation against Seoul as a major factor that affected South Korean businesses in China, which came in protest of Seoul’s stationing of the advanced U.S. THAAD missile defense system on its soil.
Hyundai sold one of its factories in Beijing to the Beijing city last year, and it was later acquired by Li Auto, a Chinese electric vehicle maker, formerly known as Lixiang Automotive.
(Yonhap)
