Hyundai Motor prepares to ship China-made vehicles to Southeast Asia, its China joint venture and two people knowledgeable with the matter informed Reuters, as a plunge in Chinese sales has left a lot of its massive local manufacturing capacity idled.
Hyundai once ranked third by China sales along with affiliate Kia Motors. But just as it started its fifth factory in the country in 2017, a diplomatic dispute observed Chinese clients turn against South Korean goods, ruining Hyundai’s sales and brand image.
Diplomatic ties have since normalized but the automaker’s recovery has been erratic. The automaker booked China sales of 30,018 cars in July, falling 40 percent from July last year and its lowest monthly total since the 2008 global economical crisis. Yet sales for January-July increased 17 percent.
“A China recovery will take time. Hyundai requires a survival plan,” stated one of the people with direct understanding of Hyundai’s China operations, who were not allowed to discuss the media and so refused to be identified.
The experience revealed South Korean companies’ dependence on the Chinese market, supporting the Seoul government to court counterparts in Southeast Asia where the numerous Korean cars is paltry compared with those of neighboring Japan.
“Hyundai is thinking (exporting China-made vehicles) to emerging markets such as Southeast Asia,” the person stated. “Europe may also be a consideration.”
Most vehicles foreign automakers constructed in China with local joint-venture partners are destined for the regional market. Among those that export China-made vehicles, General Motors delivers to the United States and Volkswagen prepares to export to Southeast Asia.
Zhao Jun, a representative at Beijing Automotive Industry Holding – Hyundai’s Chinese joint venture with Beijing Automotive Group – verified the export plan.
“Yes, we plan to export cars to Southeast Asia. The earliest could be the end of this year,” Zhao stated. The automaker will decide on models depending on regional demand, he stated.