Hyundai Motor decided to inject 1 trillion won into Beijing Hyundai, a Chinese joint venture that is losing billions of dollars a year.
According to the latest report, Hyundai Motor said recently that Beijing Hyundai, a joint venture between the company and China’s BAIC Group, will lose 6.28 billion yuan (about 1.2 trillion won) and 5 billion yuan (about 950 billion won) in 2020 and 2021, respectively.
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In the past two years, its losses exceeded 2 trillion won. Therefore, in order to expand the electric vehicle business, Hyundai Motor decided to increase its investment by nearly 1 trillion won.
It is understood that Beijing Hyundai was established in October 2002 with an initial capital of 2.036 billion US dollars, which is divided equally by Hyundai Motor and BAIC, and their cooperation period is 30 years.
However, Beijing Hyundai’s operating conditions have been deteriorating. Its sales declined rapidly after peaking at 1.14 million units in 2016. Sales in 2021 totaled 385,000 units, just 55.4% of the 560,000-unit annual target set at the beginning of the year.
As sales have slumped, so has an output at factories owned by Beijing Hyundai. Beijing Hyundai can produce 1.65 million vehicles a year at five plants in Beijing Shunyi Plants 1, 2, and 3, Hebei Cangzhou and Chongqing.
Among them, Beijing Shunyi No. 1 Plant was sold to China Electric Vehicle Company Ideal, and the remaining plants have a combined production capacity of 1.35 million vehicles. However, the company’s actual sales were only 26.7% of its capacity, the source said.
