Hyundai to Help Tip $1.1 Billion Into China Unit as Sales Crater

(Bloomberg) -- Hyundai Motor Co. and BAIC Motor Corp. plan to inject $1.1 billion into their China joint venture in a bid to speed up the unit’s transition toward electric vehicles and boost exports amid falling sales in the world’s largest automobile market.

South Korea’s Hyundai and BAIC subsidiary BAIC Investment will each inject about $548 million into their equally owned venture Beijing Hyundai Motor Co., according to a Hong Kong exchange filing Wednesday.

The capital injection will support Beijing Hyundai in maintaining capital stability in the short term and aid in “achieving transformation and development strategies through investment in new technologies and products in the long run.”

“The company plans to introduce more products tailored to Chinese consumer needs and expand its export scale in international markets,” BAIC said.

But it remains to be seen whether a capital injection can reverse a multi-year slump for Hyundai and its sister brand Kia in China, where the rapid transition to EVs and the rise of domestic champions like BYD Co. have hit the sales and profits of legacy automakers. There are also questions around the wisdom of leveraging China as an export base when Beijing is engaged in trade disputes from the EU to the US.

Hyundai’s joint venture with BAIC has sold just 137,300 vehicles this year as of October, a 41% decline from the same period of 2023, according to data compiled by Chinese auto media Gasgoo.

Like many foreign carmakers, Hyundai has been dialing back other parts of its operations in China, including closing factories. Even demand for those shuttered facilities has been tepid — its Chongqing plant sold at the beginning of this year for half its original price.

Beijing Hyundai is also loss making, recording a deficit of 2.6 billion yuan ($358 million) for the nine months ended Sept. 30, Wednesday’s filing showed. It lost 5.4 billion yuan after tax last year while the value of its total assets has shrunk to 21.9 billion yuan as of September from 35.5 billion yuan at the end of 2022.