Will Hyundai Motor's bet on China reap rewards this time?

Automaker to make EVs tailored for Chinese market

By Lee Min-hyung

Hyundai Motor’s renewed investments in China’s auto market is aimed at enhancing the carmaker’s tech prowess, particularly in infotainment systems or other parts for electric vehicles (EV), experts and industry officials said Monday.

Last week, the Korean carmaker and its Chinese partner — BAIC — agreed to invest $1.1 billion (1.57 trillion won) in their joint venture, Beijing Hyundai. The invested capital will be used to develop eco-friendly vehicles, such as EVs, tailored for the largest economy in Asia.

Hyundai Motor has, in recent years, placed its strategic focus on expanding sales of EVs in major global markets for automobiles, including the United States and Europe, and achieved solid sales growth there. But this was not the case for the Chinese market, where home-grown players, such as BYD, dominate.

Experts said chances are slim that Hyundai Motor will be able to attain any immediate outcomes there through the latest investments.

“The carmaker is unlikely to chalk up any meaningful revenues or accomplish an outstanding rebound in its EV sales there from a short-term viewpoint due to strong rivalry from China’s local firms,” Lee Ho-geun, an automotive engineering professor at Daedeok University, said.

However, the latest venture can be seen as the carmaker’s effort to introduce more technologies from China, which is undeniably one of the world’s fastest-growing EV markets, according to the professor.

“Hyundai Motor will be able to gain a first-mover advantage in areas, such as hydrogen cars, in the Chinese market, but it looks very tough for the company to widen its EV market share there for now,” he said.

Hyundai Motor has suffered a drastic sales decline in China over the past decade, largely due to the growing competition from its Chinese counterparts. In response, the carmaker sold a factory in Beijing in 2021. It also ended up selling another production line in Chongqing this year.

The Korean carmaker sold more than 1.14 million vehicles in China in 2016, but the figure plummeted to below 200,000 for the first 10 months combined this year.

Officials from the auto industry also concurred over the pessimistic sales outlook due to Chinese customers’ preference for domestic brands, such as BYD and Geely.

“It appears tough for Hyundai Motor to make a meaningful short-term rebound there, but the carmaker looks to have made the latest decision in reflection of China’s ever-growing presence in the global EV market,” an industry official said.

Other experts, however, painted an optimistic picture for Hyundai Motor’s bet on China.

“Hyundai Motor has already carried out its restructuring processes in China by closing down some factories,” Kim Pil-soo, an automotive technology professor at Daelim University College, said.

“Given Hyundai Motor’s global EV footing, there still stands a possibility that the carmaker can achieve decent success in China by launching diverse localized products, as it has done so in India."