Hyundai To Suspend Operations at a Factory in Beijing

Hyundai Motor Co. says it will adjust to slumping sales in China by idling the oldest of three assembly plants it operates in Beijing with partner BAIC Group.

The 17-year-old Plant 1 in Beijing is the apparent target. The Nikkei says the facility is operating with relatively old equipment that would be costly to replace.

Reuters reported last month that Hyundai was considering capacity cuts after demand for its cars plunged 23% in October-December.

Local media reports have speculated that the targeted facility may eventually be closed. But Hyundai emphasizes in a statement that it intends to suspend but not close the factory, citing the need to improve competitiveness and profitability.

Hyundai and BAIC also run two other factories in China through their Beijing Hyundai Motor venture. The five facilities have combined capacity to make 1.8 million vehicles per year for the domestic market. But last year Hyundai sales there fell 9% to 750,000 units.

Hyundai says about 2,000 workers at the five factories have accepted voluntary retirement packages or transferred to other plants. Media reports say the joint venture’s facilities are collectively functioning at only about 50% of capacity.