Hyundai Motor, which is reeling from slowing sales in China, is thinking about cutting capacity at its factories in its biggest auto market, CEO Lee Won-hee said, according to two people with direct understanding of the matter.
Lee discussed this during a meeting with analysts and investors on Wednesday, the people who attended the event informed Reuters.
He told the meeting that the automaker is thinking about addressing overcapacity at its old factories located in China, while cutting the number in the country, according to a note from one of the people which was read by Reuters.
A Hyundai Motor spokeswoman stated that the automaker is evaluating various optimization strategies to improve facility efficiency and has initiated voluntary retirement for workers in China.
China’s auto industry, the world’s biggest market, is decreasing after strong recent growth, with demand hit a declining economy and the fallout of trade frictions with the United States. China’s car sales dropped 2.8 percent in last year, marking the first contraction since the 1990s.
Hyundai’s China sales slump 23 percent in the fourth quarter amid a lack of attractive models and strong branding while competing from both Chinese and international automakers.
Lee stated Hyundai is also thinking about shipping vehicle kits from China to Philippines, South America and other nations for local assembly, the note stated.
He stated that General Motors, Ford and Honda are also cutting global excess capacity, the note included. Lee stated globally automakers have the capacity to produce 135 million vehicles annually, 31 percent more than the industry demand of 95 million vehicles.