A Hyundai car drives out of a plant of Hyundai Motor Co on the outskirts of Beijing, China January 25, 2019. REUTERS/Jason Lee
SEOUL (Reuters) – Hyundai Motor said its Chinese joint venture is accepting voluntary retirements from employees and reviewing various “optimization plans” at its factories in the country, following a slump in car sales.
China, the world’s biggest car market, suffered its first sales contraction in more than two decades last year due to pressure from a crippling Sino-U.S. trade war and the phasing out of tax cuts on smaller cars.
These added to troubles for the South Korean automaker which is still recovering from a diplomatic row between Seoul and Beijing that had slammed demand for Korean products in China.
Hyundai, which together with affiliate Kia Motors was the third-biggest automaker in China until 2016, is now saddled with overcapacity, with its 2018 China sales reaching only half of its total production capacity.
“Hyundai Motor is reviewing various optimization plans to enhance facility efficiency around the Chinese New Year Holidays,” the automaker said in a statement on Friday.
Chinese financial magazine Caixin reported that Hyundai’s local joint venture expects 1,500 spare working roles in the first quarter this year, and has asked staff to choose to stay or to be laid off, citing an internal document.
Hyundai’s China sales tumbled 23 percent in the fourth quarter amid a lack of attractive models and strong branding in the face of competition from both Chinese and global car makers.
For the whole year, Hyundai’s sales stayed nearly flat at 790,000 vehicles in China from a year earlier, compared with its total capacity of 1.65 million vehicles.
Reporting by Hyunjoo Jin in SEOUL and Yilei Sun in BEIJING; Editing by Himani Sarkar