INTERNATIONAL - Hyundai Motor Co is considering suspending its oldest plant in China, it said on Wednesday, as the South Korean automaker reels from tumbling sales and massive overcapacity in its biggest market.
Hyundai Motor is reviewing production to enhance competitiveness and profitability. The plan includes suspension, not closure, of Plant 1 of the Beijing plants, Hyundai said in a statement, adding that a specific time is under review.
The automaker said about 2,000 employees in China took voluntary retirement or transferred to other factories.
South Korea’s Korea Economic Daily reported earlier that the company will suspend its first factory in China as early as next month.
China’s auto industry is slowing after a period of strong growth, hit by a weakening economy and the fallout of trade frictions with the United States. China’s car sales contracted for the first time since the 1990s last year.
For Hyundai, troubles have been exacerbated by a diplomatic row between Seoul and Beijing that had slammed demand for South Korean products in China.
A lack of attractive models and strong branding makes Hyundai vulnerable to competition from both Chinese and global car makers, analysts and dealers have said.
Hyundai, which together with its affiliate Kia Motors was the No.3 automaker in China until 2016, turned in sales that were only half of its total production capacity last year.
Hyundai Motor CEO Lee Won-hee said last week the company was considering cutting capacity at its factories in China, sources said.