Political Tensions are Weakening Hyundai’s Position in China

Political Tensions are Weakening Hyundai’s Position in China

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Political tensions over South Korea’s missile defense system are severely impacting the sales of Hyundai vehicles in China, which happens to be the world’s largest auto market. Chinese buyers are shunning Hyundai products and sales have went down plunging 64% post the tensions. The Hyundai plant in Cangzhou has already been shut several times in the past six months following the tension. Assembly lines were also shut fot a week in August, then resuming operations for a day, before shutting again. A stoppage again happened this month.

These starting and stoppage of operations has become a new norm for Hyundai Motor Co. the company has already cut down the production by over two-thirds and analysts are estimating that the business may become worse after South Korea added more launchers to missile systems as North Korea is testing more nuclear weapons notwithstanding international condemnation. 

Hyundai dealers in China have stated that the current situation is leading to major losses in terms of sales and profits and that steep discounts are needed to be applied to lure consumer. 

Hyundai’s shares in the Seoul index have dropped 6.9% this year as compared to the 17% rise in the Kospi Index benchmark. The Chinese media is also weakening the company’s position in the Chinese market. Recently, the state-controlled The Global Times said that it was because of Hyundai’s arrogance and greed that the local partner BAIC Motor Corp. has started cutting ties with Hyundai as the latter resisted proposal to make use of Chinese products to cut costs.