Hyundai and Kia will each close one of their plants in China
- Hyundai and Kia sales have dropped dramatically in the Chinese market over the past two years, even before the market reversal observed in 2018. As a result, their local production (almost exclusively for the Chinese market) collapsed from 1.1 million in 2016 to 800,000 in 2018 for Hyundai and from 600,000 to 400,000 for Kia. The next two or three years are not guaranteed to be any better since the Chinese market is currently in a more difficult phase (-17.6% for all passenger cars in the first two months of 2019).
- The Hyundai-Kia group, which has five plants in China, equivalent to a production capacity of 2.1 million vehicles per year and an effective production of 1.2 million units in 2018, has therefore decided to close two plants, one for Hyundai (JV with Beijing) and the other for Kia (JV with Dongfeng). Their production overcapacity, now equal to 900,000 units, will therefore be reduced by 600,000 units.
- The Korean group's production capacity will thus fall to 1.5 million units per year, but it cannot be ruled out that this capacity will be reduced again in the future, if the Chinese market continues to decline. More generally, all manufacturers located in China will have to consider their strong current and future production overcapacities. Inovev estimates that there are several million units of overcapacity in automotive production in China.
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