Hyundai to ship China-made cars to Southeast Asia amid erratic sales recovery

SEOUL/BEIJING: Hyundai Motor Co plans to ship China-made cars to Southeast Asia, its China joint venture, as a plunge in Chinese sales has left much of its massive local manufacturing capacity idled.

Hyundai once ranked third by China sales alongside affiliate Kia Motors Corp. But just as it opened its fifth factory in the country last year, a diplomatic dispute saw Chinese consumers turn against South Korean goods, damaging Hyundai’s sales and brand image.

Diplomatic ties have since normalized but Hyundai’s recovery has been erratic. The automaker booked China sales of 30,018 cars in July, down 40 percent from July last year and its lowest monthly total since the 2008 global financial crisis. Yet sales for January-July are up 17 percent.

“A China recovery will take time. Hyundai needs a survival plan,” said one of the people with direct knowledge of Hyundai’s China operations, who were not authorized to speak to the media and so declined to be identified.

The experience exposed South Korean companies’ reliance on the Chinese market, pushing the Seoul government to court counterparts in Southeast Asia where the number of Korean cars is paltry compared with those of neighboring Japan.

“Hyundai is considering (exporting China-made vehicles) to emerging markets such as Southeast Asia,” the person said. “Europe may also be a consideration.”

Most vehicles foreign automakers build in China with local joint-venture partners are destined for the domestic market. Among those that export China-made vehicles, General Motors Co (GM) (GM.N) ships to the United States and Volkswagen AG (VW) (VOWG_p.DE) plans to export to Southeast Asia.

A spokesman at Beijing Automotive Industry Holding Co – Hyundai’s Chinese joint venture with Beijing Automotive Group Co Ltd (BAIC) [BEJINS.UL] – confirmed the export plan.

“Yes, we plan to export cars to Southeast Asia. The earliest could be the end of this year,” he said. The automaker will decide on models depending on local demand, he said.

Hyundai in a statement said the plans are not yet finalized.

“Our main focus is on further developing our businesses in China, but we are also considering different options which may include exports of China factory-specific models,” Hyundai said.