South Korea’s Hyundai Motor, the world’s fifth largest automaker when taking together with affiliate Kia Motors, has recently announced it started work on its fifth assembly facility in China, in Chongqing.
The construction of the fifth Chinese plant is designed to assist the automaker in lifting its sliding market share in the world’s largest single auto market as the make would introduce a new compact car and increase the production of hot selling sport utility vehicles. Hyundai has seen sliding deliveries in China also because it has not introduced new SUV models and the competitors have been pressing hard in the field with new additions. “We have to acknowledge that we will see a lower growth rate and we will need to fend off new challenges from fast-growing domestic Chinese automakers,” commented Hyundai Motor Vice Chairman Chung Eui-sun at the ground-breaking ceremony. Hyundai has skimped on the global SUV sales craze because it was unprepared to reveal new models in the field and has now repeatedly said it wants to lift production of such models to tap the market growth.
The South Korean carmaker will spend $1 billion with its Chinese partner, BAIC, to finish the new plant, which is scheduled to churn out 300,000 vehicles per year. The company also decided to grow its dealer network in China to 2,000 units for better customer service. Hyundai now has two factories under construction in China, which should start production in 2016 and 2017, respectively, lifting the annual combined capacity of Hyundai and Kia to 2.7 million vehicles by 2018.