Hyundai set to open $790 Million factory in China

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Hyundai’s stock has been slumping for years, but it appears that a turnaround might just be right around the corner as the company plans to open a new plant to produce a low cost sedan. The Electra will sell for around $15,000 US, with estimates putting total sales at about 100,000 units per year. The new factory will specialize in producing the 1.6 liter discount sedan and cut costs by keeping factories scattered about Asia. The company already does an extensive amount of business in South Korea, but hopes to expand into China.

Small market share might equal room to grow

Hyundai supplies about 4.6% of the Chinese sedan market, but with a new factory, expects that number to top 6% within a year. Expectations are high at Hyundai, which hopes to sell 380,000 vehicles this year to Chinese customers.

Much of the future outlook for Hyundai depends on this plant. The company has faced a slumping market share and stock price, which it hopes to rebound by delving into the Chinese automaker industry. The company is amongst many competitors in China, including Toyota, Honda, Tata Motors and many other independent automakers. With so many companies vying for the same customer base, it will be an uphill battle for business.

Slumping sales

The Beijing division of Hyundai has lost market share to foreign competitors, such as Volkswagen and GM, which have dominated the low cost market in China. While the increase of car ownership grew at a 19% clip, demand for Hyundai’s products in Beijing only advanced by 10%, lagging the market considerably. Hopefully, a new investment in infrastructure and production can put Hyundai back on the top of the Chinese car market.

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