SEOUL, Mar. 8 (Korea Bizwire) — Hyundai Motor Co., South Korea’s biggest carmaker by sales, will halt operations at one of its five plants in China due to its low utilization rate, an industry source said Friday.
Hyundai Motor plans to stop production at its No. 1 plant in Beijing within a couple of months that has a capacity of 300,000 units, a person with direct knowledge of the matter told Yonhap News Agency over the phone.
He said the decision is being made as the utilization rate recently fell to below 50 percent amid weak demand for its vehicles.
The carmaker has three plants in Beijing, one in Changzhou and another in Chongqing — whose combined capacity reaches 1.65 million vehicles.
Hyundai earlier confirmed it is “considering scaling down its output in China” due to low demand but didn’t provide details on the plan.
Hyundai’s vehicle sales in China began to falter in 2017, when Seoul and Beijing engaged in a diplomatic row over the deployment of an advanced U.S. anti-missile system called THAAD in South Korea. Seoul stressed the deployment was necessary to deter missile threats from North Korea. Beijing explicitly opposes the THAAD system, arguing it could be used against it.
Sales in China fell over 30 percent to 785,000 units in 2017 from a year earlier. The numbers didn’t improve much in 2018, when Hyundai sold 790,000 units despite the easing of bilateral tensions over THAAD, with sales numbers again remaining weak this year.
For the whole of 2018, Hyundai’s net profit plunged 64 percent to 1.645 trillion won from 4.546 trillion won a year earlier.
Hyundai has set a “conservative” sales target of 4.68 million autos in global markets this year, slightly up from the 4.59 million it sold last year.