Kia may close China car plant amid weak sales

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Kia may close China car plant amid weak sales

Kia Motors may suspend production at one of its factories in China following similar plans by affiliate Hyundai Motor last week as the auto group looks to improve manufacturing efficiency amid weakening sales in the country.

Hyundai Motor Group said Monday that Kia Motors is reviewing its operations in China to improve sales competitiveness and profitability.

The plan includes the possible halting of production at Kia’s oldest plant in the country, according to the company. It added that nothing has yet been confirmed.

The production suspension would reduce worries about overcapacity surrounding Dongfeng Yueda Kia, a joint venture involving Kia Motors, Wuhan-based Dongfeng Motor and the Yueda Group, a diversified conglomerate.

The automaker has followed a similar downward trajectory as Hyundai Motor in China as its sales figures sharply decreased to around 358,000 vehicles last year from over 650,000 units in 2016.

At the three plants it operates in Yancheng, China, the joint venture has a total production capacity of 890,000 units, with the aging Plant 1, established back in 2002, able to produce 140,000 units annually.

Hyundai Motor Group’s plans to downscale operations in China comes as it shifts focus to new markets in India and Southeast Asia.

Kia is currently building a new plant in India - with an annual capacity of 300,000 units - that will be in production from the second half of this year. The new plant will take the group’s total production capacity in the country to around one million units.

Hyundai Motor signed a memorandum of understanding with Vietnam’s Thanh Cong Group earlier this year to set up a joint sales venture company. The automaker is also planning to build a second factory in the Southeast Asian country. It will increase its total annual production capacity to 100,000 units.

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