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Hyundai’s plant in Cangzhou, in China’s northern Hebei province.
Hyundai’s plant in Cangzhou, in China’s northern Hebei province.

Hyundai’s Chinese Sales Plummet With North Korea Crisis

Hyundai’s Chinese Sales Plummet With North Korea Crisis

At a factory in northern China making Hyundai cars, employees are not sure from one day to the next whether their workplace will be open. Chinese buyers are shunning the automaker because of political tensions over a missile-defense system, with sales plunging 64% in the aftermath.
The plant in Cangzhou inChina’s northern Hebei province closed multiple times in the past six months, said a worker who does not want to be identified for fear of losing his job. Assembly lines shut for a week in August, then resumed operations for a day before closing again, he said. Another stoppage occurred this month, Bloomberg reported.
These start-and-stop operations are the new normal for Hyundai Motor Co. in the world’s largest auto market, said Bloomberg Intelligence analyst Steve Man. Hyundai already curtailed production there by two-thirds, and business may get even worse after South Korea added more launchers to the missile system in response to North Korea testing more nuclear weapons despite international condemnation and sanctions.
Dealers in China say they’re losing thousands of yuan on every Hyundai sale because of steep discounts, and some may drop the brand.
Hyundai’s Seoul-listed shares have dropped 6.9% this year, compared with a 17% increase in the benchmark Kospi Index.
The state-controlled Chinese media is piling on, too. The Global Times, a tabloid affiliated with the Communist Party mouthpiece People’s Daily, said local partner BAIC Motor Corp. was fed up with Hyundai’s “greed and arrogance” in resisting proposals to cut costs by using more Chinese suppliers. BAIC declined to comment.
The China collapse is just one of multiple headaches for South Korea’s biggest automaker. Hyundai’s vehicle sales worldwide fell 6% in August, the sixth consecutive month of decline.
Net income in the second quarter fell 51% to 816.9 billion won, and the company said it expected a tough second half of the year.

 

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