Hyundai Motor Co. began constructing its fifth factory in China to meet the future demand for compact cars in the world’s largest auto market.
Hyundai, which already started building its fourth plant in the Chinese city of Changzhou in April, announced its plan to construct a fifth plant in the southwestern megacity of Chongqing. “With the Chongqing plant, Hyundai Motor secures a bridgehead to make inroads into the western part of China,” said Vice Chairman Chung Eui-sun.
South Korea’s largest automaker joined hands with Chinese automaker BAIC Group to invest US$1 billion in constructing the new plant. Scheduled to begin production in early 2017, the facilities will manufacture roughly 300,000 units of compact sedans and SUVs annually.
“We are very pleased to be building our fifth plant in Chongqing -- a city located in Midwest China, where robust economic growth is taking place,” said Hyundai Motor Group Vice Chairman Chung during a ceremony to celebrate the plant’s construction.
“The Chongqing plant will act as a bridge connecting east and west China and enhance Hyundai Motor’s standing to become a leading automaker in China,” he said.
The company said that it chose to launch its fifth factory in Chongqing, given the city’s strategic location connecting western and eastern China, and its fast-growing automobile market and favorable governmental support.
Hyundai and its affiliate Kia Motors aim to expand their combined annual production (in China) to 2.7 million vehicles by 2018.
The new plants in Changzhou and Chongqing will produce “new small cars and small sport utility vehicles to compete against the ever-growing sales of Chinese brands and strengthen price competitiveness,” the released statement by the company read.
By 2016, Hyundai will increase its dealership stores in China to 2,000, up from 1,700.
Auto sales in China have been slowing, as the country’s economy grew only 7.4 percent last year, marking its slowest pace in 24 years.
Chinese brands have also cut prices, making it difficult for Hyundai to sell vehicles.
In May, sales of Hyundai passenger cars in China fell by 0.4 percent. In the first five months of the year, sales of Hyundai in China declined by 3.5 percent.