Hyundai Motor lost to China: 3 of the 5 factories were sold, and sales fell by 80%.

The predicament of the Korean automobile giant in China was completely exposed by the news that the factory was sold at a discount. 

Beijing Hyundai, once the king of million-dollar sales, is now selling its Chongqing plant with an annual production capacity of 300,000 yuan at three discounts.

Not only that, the CEO of Hyundai Group also said that he plans to keep only two Chinese factories, and the rest will be closed and sold.

In fact, it is an indisputable fact that Hyundai has lost competitiveness in the Chinese market.

In the transformation of new energy and intelligent vehicles, even if it has become the world's third largest car company, Hyundai and Korean cars are repeating Samsung's mistakes in the smartphone era.

Hyundai lost to the Chinese market

Recently, Beijing Hyundai was selling its production plant in Chongqing at a discount.

The annual production capacity is 300,000 vehicles and 200,000 engines, and the package price is 2.58 billion yuan, including the plant's land use rights, equipment and other facilities, all of which are sold.

In fact, this is already the second price reduction of the Chongqing factory in the near future.

The factory was first listed for sale in August this year, when the transfer price was 3.684 billion yuan, probably because no one took over, so it had to be sold at a reduced price again.

The price of 3.684 billion yuan is already half of the original total investment of 7.75 billion yuan, and now the price after the price reduction is equivalent to only three percent of the total value of the factory.

Is this a complete end to play, or is it a business transformation with reduced capacity?

For now, it's the latter.

Because at Hyundai's investor day in June, group CEO Chang Jae-hoon said it would restructure its troubled China business, planning to sell two factories, one of which had already been sold before.

Hyundai has a total of five factories in China, including Beijing Hyundai Shunyi Plant 1, 2 and 3 Factory, as well as Cangzhou Plant and Chongqing Factory.

Among them, the first plant in Shunyi was sold to Li Auto in 2021, and now the Chongqing plant is being sold at a discount, which means that one of the remaining three factories will also be closed for sale.

In addition, according to Hyundai's plan, the last two remaining plants will be reorganized and used for export business in the future.

In the past 21 years in China, Hyundai Motor, which has sold more than one million for many consecutive years, has now voluntarily sold its factories and shifted its business focus out of China.

Why is this?

Hyundai is no longer moving

Hyundai in China highlights stay in 2016.

Annual sales of 1.142 million units, ranked sixth, and the fourth consecutive year of sales exceeded one million.

However, since 2017, Hyundai's sales have continued to plunge, achieving four consecutive declines.

By last year, Beijing Hyundai's annual sales were 250,000 vehicles, only 22% of its peak sales, a contraction of nearly 80%.

At the same time, Hyundai's global sales are gradually recovering, and the proportion of sales in markets other than South Korea is increasing year by year.

Also in 2022, Hyundai Group became the world's third largest car company with 6,848,200 units, and its operating profit surged by 47%.

For modern times, the Chinese market is very important, but it can't be played, and it can't be rolled, so the importance and resource investment are decreasing.

According to Hyundai Group's latest plan, Hyundai will take the initiative to streamline its business in China, reducing its product line from 13 to 8, focusing on high-end and SUV models, and focusing more on overseas.

Although Hyundai and BAIC jointly increased their capital in Beijing Hyundai by 942 million US dollars (about 6 billion yuan at that time) in the first half of this year, in Hyundai's latest global plan, the investment in the United States, Europe and South Korea will reach 28 billion US dollars (about 204.613 billion yuan).

The speech of the CEO of Kia China some time ago also reflected the thinking behind Hyundai Group's decision to a certain extent:

I earned $2.1 billion globally in the first quarter of this year, which can afford the Chinese market, do your local companies have the financial strength to play? You burn first, and I'll wait to come in and grab the market later. ... Let the enemy go to test the wound first, I have money in my pocket, it's all technology, I haven't given up this market, and it's also a strategy to come in at the right time and clean you up.

The Chinese market is too volatile, instead of entering the market now, it is better to retreat strategically first, and then use the money earned in the global market to subsidize and win back the market when time is almost the same.

Companies always have to make money, and Hyundai has made choices based on the status quo that can make greater profits.

Hyundai in China opens high and goes low

In 2002, taking advantage of the spring breeze of China's accession to the WTO, Beijing Hyundai was officially established.

At that time, although there were already many joint venture brands in the Chinese market, such as German and Japanese, but the price was generally high, Hyundai was looking at this gap, launching Sonata, Elantra and other models known for their cost performance, and quickly seized the domestic market.

Among them, the Elantra became a hit, with solid leather, fuel saving and good service, and quickly became the main sales force of Beijing Hyundai, and in 2009, the domestic ownership of the Elantra exceeded 700,000.

In the face of strong domestic demand, Beijing Hyundai began to play a set of "multi-generational" playing style, Yuedong, Langdong, and Leading, plus Elantra, four generations in the same household, selling together.

Moreover, Sonata also adopts the same number of paths, and the three generations of Mingyu, Lingxiang, and Pre-Xiang replace Sonata, and they are also sold on the stage.

However, although it is a replacement, there are no obvious changes in the actual technical level and appearance of these models.

For example, several generations of Elantra, in addition to the changes in the gearbox, the overall technical platform has not changed much, and even later there was a replacement operation of 1.6L to 1.5L, 6AT to CVT and price reduction.

Although the cost-effective, multi-generational strategy did allow Beijing Hyundai to achieve price for volume in the early stage of its establishment, but with the continuous development of domestic brands, other joint venture brands introduced more and more models, in the middle and late period, leaving Beijing Hyundai with less and less market and space, even if the sales volume is replaced by Elantra , Tucson, ix35 and other models for many times, it has not been able to save the overall sales continued decline.

And in terms of new energy transformation, Hyundai's strategy in China has not kept up.

In 2021, Beijing Hyundai tested the water of new energy and launched the Tucson L hybrid and Mingtu pure electric versions, but at that time BYD had risen, and there was still Tesla in the pure electric market, which did not reflect product strength and two new energy models suspected of oil to electricity, and the market did not buy it.

IONIQ 5 and IONIQ 6, which can truly reflect the strength of modern new energy technology, have not been introduced into the Chinese market.

You know, as early as 2016, the IONIQ model has been unveiled. When used as a pure electric platform, it supports 800V fast charging and accelerates 3.5s per 100 kilometers, and this technical level is not backward.

But I don't know if there is a problem with the strategy or do not want to introduce it, these two hot-selling models abroad have not appeared in the Chinese market so far.

As a result, Beijing Hyundai's original fuel vehicle market share was divided up by its own brands and other joint venture models, and it did not show particularly high enthusiasm in the Chinese market in terms of new energy transformation.

Finally, in the first half of this year, the transformation plan is long overdue:

By 2025, Beijing Hyundai will hybridize all domestic fuel vehicles and build a matrix of hybrid models with one MPV, two sedans and three SUVs. And to release 4-5 pure electric vehicles in the next three years; The company aims to sell 500,000 units in 2025.

However, the model in the transformation plan has not yet been launched, and the first thing waiting is the news of selling the factory at a low price.

And recently there is also news that Beijing Hyundai wants to OEM Beiqi Extreme Fox, and the two sides are discussing relevant details.

The joint venture brand concession factory to the independent brand OEM is also the first time in the world.

Japanese cars attract most attention, while the dilemma of Korean cars is even more severe - and sadly, even defeat is not discussed and quietly reported.

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