India is poised to become South Korean automotive mogul Hyundai Motor Group’s biggest overseas car production base as combined output of Hyundai Motor Co. and its smaller sibling Kia Motors Corp. in India is set to surpass that in China in which the Korean automakers are grappling with dwindling demand.
According to data released by Korea Automobile Manufacturers Association on Sunday, Hyundai Motor and Kia Motors’ combined auto production in China reached 441,560 units in the first six months of this year, down 20.4 percent from the same period a year ago. Hyundai Motor’s output dropped 23.9 percent to 288,060 units and Kia Motors 12.8 percent to 153,500 units over the same period.
The two automakers’ total annual auto output in the world’s biggest auto market has been on a decline in recent years. Their total output in China reached over 1.16 million units in 2016 before a diplomatic row between Seoul and Beijing flared up following the Korean government’s decision to deploy an U.S. anti-missile system in its soil. But the figure is likely to fall below 1 million units this year and touch its lowest since 1.04 million units in 2010 should the current trend continue. Their combined production capacity in China is 2.7 million units.
While struggling in China where local brands also have rapidly expanded their presence amid dwindling demand for Korean cars, Hyundai Motor and Kia Motors’ production output in India has surged, closely chasing behind that of China’s after the completion of the construction of both brands’ manufacturing facilities.
The gap between the two automakers’ total output in China and that in India was narrowed to 89,723 units in the first half of this year from 206,561 units in the same period a year ago. In the April-June period, total output in China was 190,000 units and India 170,000 units, and in June alone, production in China remained below that of India.
Hyundai Motor’s manufacturing facility in India expanded output after exceeding an annual capacity of 650,000 units. In the first quarter this year, Hyundai Motor sold more cars in India than did it in China.
Also, once Kia Motors begins full operation of its manufacturing plant in India, total output would exceed that of China, experts projected.
Kia Motors began mass production of its small-size sport utility vehicle Seltos at its India facility on Aug. 8. The automaker expects its Indian plant’s output to hit 300,000 units in three years from 52,000 units this year.
Hyundai Motor and Kia Motors’ combined production capacity in India is 1 million units. Hyundai Motor ships 40 percent of its production in India overseas, and Kia Motors also plans to up exports from its Indian factory to emerging markets such as Africa and the Middle East.
In contrast, industry insiders expected that Hyundai Motor and Kia Motors’ presence in China will continue to dwindle.
As of June, Kia Motors halted the operation of its Yancheng Factory 1 in Jiangsu Province in China and leased it out to Chinese joint-venture partner Yueda Group. Hyundai Motor’s Beijing Factory 1 also has suspended production since early this year.
By Lee Jong-hyuk and Lee Eun-joo
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