Hyundai Motor sells China factory for W300 bil. to maximize efficiency

Hyundai Motor Group Executive Chair Chung Euisun, third from left, applauds with Chinese officials to celebrate the opening of the automaker's factory in Chongqing in June, 2015. Courtesy of Hyundai Motor

Hyundai Motor sold off its manufacturing facility in the Chinese city of Chongqing, as part of a strategic shift to reset its global sales strategy focusing on profitable SUVs and luxury vehicles, the automaker said Tuesday.

According to the Korean automaker, Beijing Hyundai Motor sold the manufacturing facility to a Chinese company for 299 billion won ($223.88 million) at the end of last year. Beijing Hyundai Motor is a joint venture between Hyundai Motor and BAIC Motor.

Hyundai Motor put the plant up for sale in August of 2023 amid plummeting automobile sales there. The plant is capable of producing 300,000 vehicles a year, but operations were suspended since December of 2021.

The automaker explained that the decision was part of its ongoing efforts to maximize operational efficiency and realign its sales strategy.

"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," an official at the automaker said.

Hyundai Motor entered the Chinese market in 2002 and sales there peaked at more than 1.13 million vehicles in 2016. However, it faced a decline in momentum due to deteriorating relations between Seoul and Beijing. The unexpected outbreak of the COVID-19 pandemic further weakened Hyundai Motor's presence in the Chinese market.

Hyundai initially operated five factories in China, but with the recent decision, the number has been reduced to three. The remaining manufacturing facilities will now serve as a base for the firm's automobile exports to the Southeast Asian market.

The automaker plans to reorganize its sales strategy with a focus on profitable luxury vehicles. The company is also set to widen its electric vehicle (EV) lineup in China to at least four from the current one by 2025.