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In the face of declining sales and serious overcapacity, Hyundai previously said it was considering closing its No. 1 factory in China to enhance its competitiveness and profitability. Hyundai Motor has decided to close its No. 1 plant in China, Bloomberg reported.

Beijing Hyundai, Hyundai's joint venture with BAIC in China, has five vehicle production plants, with the first three in Shunyi in Beijing, one in Cangzhou, Hebei and one in Chongqing, with a total annual capacity of 1.65 million vehicles. The oldest factory in Beijing has a capacity of 300000 vehicles, and the closure means that there are only four factories left in Beijing Hyundai, which will ease the problem of spare capacity and production pressure.

The shutdown of a factory also takes into account the problem of backward production capacity. The first factory was built earlier, the production efficiency is relatively low, and the maintenance cost of aging equipment is heavy. Under such circumstances, production will gradually be transferred to new factories with advanced equipment. For example, the follow-up model of ix25, which was originally located in the first factory, has been transferred to the Chongqing factory to be put into production this year.

Hyundai Motor said earlier that the closure of the Hyundai No. 1 plant in Beijing was due to a sharp drop in sales and serious overcapacity in the world's largest car market. Hyundai also said in a statement that the company is evaluating production to enhance competitiveness and profitability.

In fact, before deciding to close the first factory, Beijing Hyundai had adjusted its factory staff, with about 2000 employees voluntarily leaving or transferred to other factories, including transfer to factories in Cangzhou and Chongqing to support work.

As far as we know, employees who leave can receive severance compensation, a subsidy of NT $1 + 8000, as well as 3.5 times the year-end bonus and one month's full monthly salary compensation. Employees who choose to change jobs will receive a placement subsidy of 5000 yuan, and Beijing employees will be reimbursed for round-trip high-speed rail tickets once a month.

The Beijing Hyundai brand has always gained a foothold in the Chinese market with a cost-effective advantage, and continuously sold more than 1 million in 2013-2016. With a storm in 2017, Hyundai's sales plunged by 31.3% to 785000 in 2017, and only 790000 in 2018, basically the same as the same period last year. According to the capacity layout of 1.65 million vehicles, more than half of the production capacity of Hyundai's five plants in Beijing has been idle.

Reduced sales, serious idle production capacity and increased operating pressure are the main reasons for the closure of Beijing Hyundai No.1 factory.

According to Hyundai's first-quarter results announcement, Hyundai sold only 131000 vehicles wholesale in China, down 19.4% from the same period last year.

China, the country's largest auto market, suffered a cold winter, with overall new car sales declining. Domestic car production and sales in the first quarter of this year were 6.336 million and 6.37 million, respectively, down 9.81% and 11.32% from the same period last year. The downward market environment led to layoffs and factory closures.

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