Han Media: "China-made Hyundai Motors" sweeps the globe ... Reverse thinking strategy in the graveyard of imported cars

¬ The rise of Chinese factories as a main export base

Statistics show that the Chinese factories of Hyundai and Kia have seen a fivefold increase in the number of vehicles produced and exported overseas within two years. In the first half of this year (January to June), the export volume from the Chinese factories ranked third among the overseas factories of the Hyundai Motor Group, surpassing Turkey and India, which are the main export bases.

On the 20th, Hyundai and Kia revealed that the export volume from the Chinese factory in the first half of this year was 118,000 units, five times that of 2023 (23,000 units) and twice that of last year (64,000 units). The export volume from the Chinese factory of Hyundai increased from 3 units in 2023 to about 10,000 units last year, and then rose to 35,000 units this year. The most exported model is the Elantra, with about 19,000 units mainly exported to the Middle East such as Saudi Arabia. The number of Sonata taxis imported into South Korea from last year also reached about 10,000 units. This is the first time that Hyundai has sold cars made in China in South Korea. A Hyundai representative said, "Starting from the export of Elantra in the second half of last year, the export volume began to increase. Currently, the Middle East, ASEAN, etc., are the main target countries for exports." Kia also exported 83,000 units from its Chinese factory in the first half of this year, continuing to grow since 2023 (23,000 units). The most exported model is the small SUV Sonet, with about 20,000 units sold to South America and the Middle East, etc.

Previously, Hyundai and Kia established factories in third markets such as Indonesia and Brazil as export bases. A Hyundai representative said, "To add equipment investment at overseas factories, local domestic demand must support it, but the growth rate of third markets is slower than expected." Additionally, due to U.S. tariff barriers, the Mexican factory's export route has been effectively blocked, increasing uncertainty. In contrast, compared to major countries, China still has low labor costs and has already established a standardized production method, making it more advantageous as an export base.

Hyundai Motor Group once had as many as 8 factories in China (5 for Hyundai and 3 for Kia). However, starting around 2020, some factories were sold and shut down, and now only 2 Hyundai factories and 2 Kia factories remain in operation. The annual production capacity once reached 2.7 million units, but has now dropped to about 1.5 million units. Last year, approximately 400,000 units were produced, with an operating rate of about 30%. Hyundai Motor Group plans to increase the output of these factories by focusing on exports. With the expansion of exports, the performance of the Chinese factories has improved. Beijing Hyundai, the joint venture of Hyundai in China, saw a loss of 4.23 billion won (approximately 220 million yuan) in the first quarter, which was significantly reduced compared to the same period last year (14.6 billion won, approximately 750 million yuan). Yueda Kia, the joint venture of Kia in China, achieved profitability for the first time in 8 years last year, and in the first quarter of this year, it recorded an operating profit of 5.22 billion won (approximately 270 million yuan).

With the transformation of exports, Chinese factories are gradually regaining vitality, and Hyundai Motor Group also plans to strengthen its strategies in the Chinese electric vehicle domestic market. The market share of Hyundai and Kia once exceeded 10%, but now it has fallen below 1%. Hyundai plans to launch its first electric vehicle in China in the second half of this year, and from 2026 onwards, it will introduce 5 environmentally friendly cars including hybrid models. For Hyundai Motor Group, the current approach is that even a 1% increase in market share in the world's largest market, China, is more effective than investing in third markets.

As the Chinese domestic sales market rapidly shifts toward electric vehicles, China has become a graveyard for import car companies. Other multinational manufacturers are also transforming their Chinese factories into export bases, exploring solutions for transformation. Data from the China Association of Automobile Manufacturers shows that from January to May this year, the domestic sedan sales of Chinese automakers increased by 26%, reaching 7.56 million units, accounting for 68.8% of the market share.

German and Japanese companies that saw a sharp decline in sales in China are also guiding their Chinese factories to transform into export bases. Nissan is considering exporting its recently launched electric vehicle "N7" to Southeast Asia, the Middle East, and South and Central America from next year. N7 was initially introduced for the Chinese domestic market. BMW started producing new electric vehicles under the MINI brand at its factory in Jiangsu Province from last year and began exporting them overseas. Its electric SUV model iX3 is also being produced in China, with an increase in exported models. Nissan's domestic sales in China last year (about 700,000 units) decreased by 12.2%, setting a record low since 2008. BMW's sales in China also decreased by 13.4% last year, selling 714,530 units. The main production bases of Swedish Volvo and British Lotus, both owned by Chinese Geely Group, are also located in China.

German Volkswagen has completely sold off its internal combustion engine car factories and reorganized its production, focusing on electric vehicle factories. As the first global automaker to enter China, Volkswagen was once regarded as a pillar company in China, but now its top position in the domestic market has been overtaken by BYD for two consecutive years. Finally, Volkswagen decided on the 11th to close its joint venture factory with SAIC Group - Nanjing Factory, and its strategy in China will focus on the production and R&D of electric vehicles. Li Hengjiu, a researcher at the Automotive Research Institute, said, "Global companies that cannot leave China will seek ways to utilize idle equipment to survive."

Source: Chosun Ilbo

Original article: https://www.toutiao.com/article/1838233478015065/

Statement: The article represents the views of the author.