이 기사는 2021년 09월 03일 08:04 thebell 에 표출된 기사입니다.

Rumors continue to swirl that South Korea’s largest carmaker Hyundai Motor will exit from the Chinese market. The carmaker has dismissed such rumors whenever they are raised.

The reason that rumors about a potential withdrawal spread is that Hyundai Motor’s car sales in China is showing no signs of recovery after hitting an all-time high in 2016.

There are rumors that Hyundai Motor will exit from China after media reports that the carmaker has decided to recall some of its employees from China. Currently, Beijing Hyundai Motor Company (BHMC), a 50:50 joint venture between BAIC Motor and Hyundai Motor, is manufacturing and selling cars in China.

“The recall of some employees doesn’t mean that we will withdraw from China or give up on our localization strategy,” said an official at Hyundai Motor.

Hyundai Motor’s car sales in China have plummeted in recent years due to tensions between Seoul and Beijing following the THAAD deployment in Korea in 2017. Its car sales there dropped 31.3% in 2017 year-on-year.

Back then, Hyundai Motor’s Chinese partner, BAIC Motor, had expressed dissatisfaction with Korean suppliers over their higher prices compared to Chinese companies, which sparked rumors that Hyundai Motor may withdraw from China.

Since 2017, South Korean automaker has put utmost efforts to make a turnaround in its sluggish sales in the world’s biggest car market by expanding its model line-ups there.

The number of models manufactured and sold by BHMC increased to 13 in the first half of 2021 from seven in 2016. Hyundai Motor also introduced electric vehicles (EV) and plug-in hybrid electric vehicle (PHEV) in its line-up.

In 2019, Hyundai Motor started to export its vehicles through BHMC. South Korean carmaker has invested a combined 1.56 trillion won ($1.34 billion) in its Chinese joint venture since 2002.

Despite its efforts, car sales of BHMC continued to shrink from 2017 to the first half of 2021. It sold 194,085 units in the first half of this year, up only 5.3% year-over-year.

BHMC’s equity value dropped 72.9% from 2.23 trillion won in 2016 to 602.5 billion won at the end of the first half of this year. It also stopped paying dividends to Hyundai Motor here since 2018 as it suffered sluggish sales.

Hyundai Motor rejects a scenario of its business exit from China as the country is and will be the world’s largest car market. “It is absurd that a global finished carmaker gives up on China,” said the official.

After years of being mired in losses, the world's fifth-largest automaker by sales is mapping out its new China strategy, focusing on EVs and luxury models.

Hyundai Motor plans to launch more than 13 electric models in China by 2030 and it debuted its luxury marque Genesis in China to tap into the growing high-end market.

The company also plans to build its first overseas hydrogen fuel-cell systems plant in Guangzhou, China. (Reporting by Do-woong Yang)