Hyundai starts work on Chongqing plant

Hyundai Motor began constructing its fifth manufacturing plant in Chongqing, China, on Tuesday in a bid to improve its foothold in the world’s largest automobile market.

South Korea’s largest automaker joined hands with the state-run Chinese automaker BAIC Group to invest $1 billion in constructing the new 293,000 square meter plant inside the Liangjiang New Area of Chongqing.

Scheduled to begin production in early 2017, the plant will produce Hyundai’s compact sedans and SUVs for the Chinese market, according to the company. Upon completion, the facilities will manufacture roughly 300,000 units annually. 

“We are very pleased to be building our fifth plant in Chongqing -- a megacity in southwest China, where robust economic growth is taking place,” said Hyundai Motor Group vice chairman Chung Eui-sun during a ceremony to celebrate the plant’s construction.

“The Chongqing plant will act as a bridge connecting eastern and western China and accelerate Hyundai Motor’s drive to become a leading automaker in China,” he said.

High-level officials, including Communist Party secretary of Chongqing Sun Zhengcai, Korean Ambassador to China Kim Jang-soo, Chongqing Mayor Huang Qifan and BAIC Group chairman Xu Heyi also attended the Tuesday event.

Hyundai Motor said it chose to launch its fifth factory in Chongqing, given the city’s strategic location between western and eastern China, the country’s fast-growing automobile market and favorable governmental support.

One of the most populated cities in the world with a population of 30 million people, the megacity lies at the center of the so-called Yangtze River economic belt -- a major part of Beijing’s drive to promote fresh economic growth and development in central China.

The upcoming plant is expected to serve as a foothold for Hyundai to expand into new markets in central and western China, which will help improve its standing in the increasingly competitive Chinese automobile industry.

The Hyundai Motor vice chairman also vowed Tuesday to respond swiftly to the changing dynamics of the Chinese economy -- including a fast-growing Chinese car industry and Hyundai’s slowing growth rate in the country. He also called for the strengthening of the company’s core business strategies in China.

“We are facing a new phase in the development of the car market in China. It will be a vastly different experience from the previous era of fast growth,” said Chung. 

Last month, the carmaker sold 80,022 units in China, down 12.1 percent from the same period in 2014, according to the Korea Automobile Manufacturers Association. Hyundai Motor and its sister firm Kia Motors, together sold 9.9 percent fewer cars in May of this year than the same period last year.

“We have to forget our past glories and build for the future with our three existing plants and the new Changzhou and Chongqing plants, utilizing our newest facilities as the source for even bigger success in the Chinese market,” he said. 

The company’s four key strategies include: diversifying its production sites across China, offering a wider range of price-competitive, locally-made vehicles -- including small SUVs, midsize sedans and large luxury sedans --, reinforcing customer management, and developing more environmentally-friendly vehicles.

“As China’s annual vehicle production is projected to reach 23 million units by 2018, Hyundai Motor together with Kia Motors will reach an annual combined production capacity of 2.7 million vehicles in China the same year,” a Hyundai spokesperson said.

By Sohn Ji-young (jys@heraldcorp.com)