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Hyundai is electrifying its fifth plant in Chongqing to revive its declining new car business in China, according to the latest foreign media reports. In the future, the plant's capacity will strike a balance between traditional fuel vehicles and new energy vehicles.

Hyundai's global sales in the first half of the year were 2.13 million, down about 5 per cent from a year earlier. Apart from the fact that sales in South Korea's home market are still growing, overseas markets have repeatedly declined. Sales in overseas markets were 1.7422 million, down 7.7 per cent from a year earlier. Sales in China in the first half of the year were about 276000, down 27% from the same period last year.

From January to May this year, Beijing Hyundai's market share was only 3.2%. The reason for the jump from 3.2% to 3.5% was that dealers handled the destocking of national five models in June.

It is reported that the operating rate of the Hyundai Chongqing plant in Beijing has been on the high side. In the past 2018, the factory, which has an annual capacity of 300000 vehicles, sold only 70, 000 vehicles, and the utilization rate of the whole plant was less than 30%.

Due to the continuous decline in sales, Hyundai factory in Beijing has serious overcapacity. On January 23, Beijing Hyundai also broke the news that 2000 workers were laid off at the first, second and third factories.

In fact, not only in the Chinese market, but also in other major global markets in recent years. Hyundai Kia's global sales peaked at 7.63 million in 2016, fell 10 per cent to 6.87 million in 2017 and returned to 7.04 million in 2018.

In the first half of 2019, Korean cars faced recession in both the Chinese market and the American market, and stagnated in the traditional strong markets, the Korean domestic market and the Russian market.

In April this year, Hyundai began to increase the capital of Hyundai in Beijing and began to promote the electrified transformation of the Chongqing factory. In the future, half of the products in Workshop 5 will be electric models. In addition, in addition to the electrified transformation, Beijing Hyundai also plans to cut capacity at the fifth plant in a timely manner.

As the production of traditional fuel vehicles requires a lot of manpower, each car needs to assemble about 30,000 parts, and if the utilization rate is less than 70%, the factory will probably not be able to make a profit. By contrast, the production process of electric vehicles involves less demand from workers, requiring about 10,000 parts and components, and it is much easier to automate the production process.

Beijing Hyundai Encino will only produce its pure electric version in the Chinese market in the future, and the new car will be officially launched to the market next month. In addition, Beijing Hyundai has begun to develop Festa's all-electric model, which is scheduled to go into production in September, when about half of the products of the fifth factory will be pure electric models.

Meanwhile, Beijing Hyundai is revamping its Beijing plant to increase production of plug-in hybrid models, which sold almost zero in China from March to June after losing local subsidies. South Korean media revealed that the second factory in Beijing will increase the output of Sonata and leading plug-in hybrid models in the future.

In the second half of the year, Beijing Hyundai will launch five new cars one after another, namely, the new leader, Renner, the new generation ix25, the Oncino EV and the Festa EV. Covering compact cars, compact cars, small SUV and other market segments, and half of them are new energy models, it can be seen that the focus of Beijing Hyundai's work will shift to new energy models in the second half of the year.

Up to now, Beijing Hyundai has officially launched the next round of localized electric vehicle expansion through the strategic layout of Chongqing factory (traditional fuel + pure electric) and Beijing No. 2 factory (traditional fuel + plug-in hybrid).

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