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Hyundai Motor Company has sold off its production plant in China. The South Korean automaker put its Chongqing factory up for sale for ₩300 billion or around $225 million.
As per Bloomberg, Hyundai Motor sold the facility for less than half the price it initially sought when it was filed for sale in August of last year. It was listed for ¥3.68 billion at that time, but the price was reduced to ¥2.58 billion just two months later.
The buyer was revealed to be the Chongqing Liangjiang District Yufu Industrial Park Construction Investment Ltd., which the region's government funds back. The company shared that the sale was finalized in the last quarter of 2023.
Strategic Sale Decision
Hyundai Motor said this week that it unloaded its China plant as part of its efforts to improve its operations in the country. This move is hoped to help the company boost its efficiency amid declining sales.
Hyundai and its Kia Motors subsidiary are reportedly uncertain about operating in the Chinese market; thus, they are left with tough decisions. Their sales are low in the country even though China is currently the largest auto market in the world. The earnings here only account for five percent of their total sales.
"Hyundai Motor is actively working on various initiatives to enhance our business structure and profitability in China, and the sale of the factory aligns with those efforts," The Korea Times quoted a Hyundai Motor official saying in a statement.
Hyundai's Entry in the Chinese Market
Hyundai Motor arrived and first established its business in China in 2002. Its sales in the country reached the highest record in 2016 when it sold over 1.13 million vehicles. However, the numbers declined due to crumbling relations between the Korean and Chinese governments. The unexpected COVID-19 pandemic caused sales to plummet even more.
The company set up five plants, and with the recent sale of its Chongqing factory, it now operates just three facilities. Hyundai Motor has designated its last three factories in China as bases for its vehicle exports to the Southeast Asian market.
Photo by: Hoyoun Lee/Unsplash
