Hyundai Motor shutters key plant in China due to slow-moving sales

Hyundai Motor recently closed down its primary plant in China, but the company said on Tuesday, Feb. 23, that this is just a temporary setup. It was revealed that the reason for the closure was the slow sales this year.

As per Yonhap News Agency, Hyundai Motor shuttered its factory located in the southwestern city of Chongqing in China. The operations in the said plant were first suspended earlier this year, and this was carried out in an effort to improve production efficiency amid the stiff competition in the auto market.

In a statement that was sent to YNA, the Korean automaker stated, "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 our strategy of enhancing the efficiency of and upgrading our product lineups. We are pursuing and planning various measures to tide over the slump.

Yicai Global, a local news outlet in China, reported this week that some sources revealed most of the employees at the factory were already placed on leave due to the closure. Hyundai Motor's Chongqing facility is one of the four plants that is being operated by Beijing Hyundai, a joint venture firm that was established by the Korean car brand and China's BAIC Motor.

Beijing Hyundai also has two other plants, and they are located in Changzhou and Beijing. In 2017, the company invested ₩1.6 trillion or around $1.3 billion to construct the Chongqing factory. This factory is capable of producing 300,000 vehicle units per year and mostly produces the localized version of Hyundai's Encino and Verna models.

Market analysts suggested that the cause of Hyundai Motor's slow sales in China could be related to Beijing's economic retaliation against S. Korea. The Chinese government has been protesting Seoul's decision to allow the deployment of an advanced U.S. Terminal High Altitude Area Defense (THAAD) missile defense system in the country. In fact, many other business sectors were also affected by this issue.

Meanwhile, in October last year, The Korea Times reported that Hyundai's sales were already declining at this time due to the tensions created by the THAAD. Since then, the company has been putting a lot of effort into reviving sales by launching new models for the Chinese market.

Not long ago, Hyundai brought its Genesis luxury car brand in China, and it is also aiming to introduce 20 electric vehicle models in the country by the year 2030. Currently, Hyundai Motor still has four plants operating in China, including the shuttered Chongqing plant.