TAIPEI (Taiwan News) — South Korean car manufacturer Hyundai Motor Co is considering halting production at its oldest plant in China due to overcapacity issues.
Reuters reported on Wednesday that Hyundai’s sales in China for 2018 amounted to only half of the company’s total production capacity.
Plans on the suspension of activity are yet to be finalized, but the automaker is “reviewing production to enhance competitiveness and profitability.”
Hyundai stated the closure would only be temporary, however sources told Reuters that CEO Lee Won-hee said he was considering cutting capacity in China.
Hyundai is not the only car manufacturer to suffer tumbling sales in recent months. The slowdown is part of a larger dip in automobile sales in China.
Ford, Volkswagen, Jaguar Land Rover and General Motors all reported falls in sales towards the end of 2018. Jaguar’s factories in Chanshu and Suzhou reportedly halted production in October to restock inventories.
In January, the country’s total car sales fell by 16 percent, according to China’s Association of Automobile Manufacturers. Authorities have begun persuading consumers to part with their cash by offering rural residents subsidies on certain automobiles and new energy vehicles, CNBC reports.
The fall in demand comes as China’s economy stalls, expanding at only 6.6 percent in 2018—its lowest growth rate for 28 years.
Furthermore, Beijing announced on Tuesday the country is cutting its targeted growth rate for 2019 to between 6 and 6.5 percent.
Trouble in China’s domestic market for high-end goods currently looms over considerations on how to deal with U.S. trade frictions. The American side has suggested a resolution is in sight, which could mean good news for China’s faltering economy.
