Leading South Korean carmaker Hyundai Motor Co. and China’s Beijing BAIC Motor will inject 1 trillion Korean won ($823 million) into their joint venture to reverse the decline in the Chinese market through electric vehicles, the Korea Herald learned from company officials last Sunday.
Beijing Hyundai is a joint venture between Hyundai Motor and Beijing BAIC Motor, with each party holding 50% of the shares. The two companies will pay 50% of the capital increase by June this year and the remaining capital will be injected by December.
On March 18, Beijing BAIC Motor said in the announcement issued on the Stock Exchange of Hong Kong (HKEx), “The main purpose of this transaction is to strengthen the operation of Beijing Hyundai and effectively respond to the further investment needed for the electrification of China’s automobile industry.”
Beijing Hyundai, established on October 18, 2002, is the first Sino-foreign joint venture project in the field of automobile production approved after China’s entry into the WTO, with China and South Korea each holding 50% of the shares. Their cooperation will last 30 years. However, Beijing Hyundai’s business has been deteriorating as of late. After peaking at 1.14 million in 2016, its sales dropped rapidly. The total sales volume in 2021 was 385,000 vehicles, which was only 55.4% of the annual target of 560,000 units set at the beginning of the year.
Hyundai Motor said recently that the joint venture lost 6.28 billion yuan ($988 million) in 2020 and 5 billion yuan in 2021. In the past two years, its losses have exceeded 2 trillion won.
China is the largest electric vehicle market in the world, accounting for more than half of the total worldwide sales of electric vehicles. Last year, the sales volume of electric vehicles in China was 2.989 million, an increase of 169.1% over the previous year, and green energy vehicles accounted for 15% of the total passenger car sales last year.