Hyundai Motor Shifts Global Production Hub from China to India

Last Year India Production 680,000 Units... Surpasses China After 10 Years
China Market Slump Key Factor, India Realizing Potential
Hyundai Kia to Establish Annual 1 Million Units Production System This Year

Production Trends of Hyundai Motor's India and China Plants

[Asia Economy Reporter Kim Ji-hee] Hyundai Motor's largest global production base has shifted from China to India. This is the first time in over 10 years since the Beijing 2 plant began operations. This year, due to the novel coronavirus (Wuhan pneumonia) expected to disrupt production at factories in China, along with Kia Motors' expanding production capacity in India, it is anticipated that India will surpass China to become Hyundai-Kia Motors' largest production plant.

According to the Korea Automobile Manufacturers Association on the 3rd, last year Hyundai Motor's Chennai plants 1 and 2 in India produced 682,100 units. This exceeds the annual production capacity (680,000 units) of Chennai plants 1 and 2. During the same period, the Chinese plants produced only 663,491 units. In 2018, Hyundai's Chinese plants produced 806,253 units, nearly 100,000 units more than the Indian plants, but last year, production was about 20,000 units less.

The reversal in rankings between India and China is primarily due to the sluggish Chinese market. China has been the central hub of Hyundai's global production for the past decade. Hyundai secured an annual production capacity of over 1.8 million units through Beijing plants 1 to 3, Changzhou plant 4, Chongqing plant 5, and Sichuan plant. Local production in China peaked at 1.18 million units in 2016 but has been declining since 2017 due to the fallout from the Terminal High Altitude Area Defense (THAAD) conflict.

On the other hand, India's potential is gradually materializing. India ranks 5th globally in production volume and 4th globally in sales volume, following China, the United States, and Japan. Despite a population of 1.3 billion, the car ownership rate is only about 30 vehicles per 1,000 people, indicating significant market potential. Although the entire Indian economy experienced a downturn last year, resulting in a production decrease compared to the previous year for the first time in five years since 2014, there is consensus that the market will grow in the mid to long term.

This trend aligns with Hyundai Motor's mid-to-long-term plan to establish India, alongside Korea, as a global hub production base. According to the overseas market growth strategy announced by Hyundai Motor at the end of last year, Korea will be developed as a vehicle development and production base focused on advanced markets, while India will serve as a foothold for pioneering emerging markets.

The sales gap between India and China is also gradually narrowing. Last year, Hyundai sold 650,000 units (wholesale basis) in the Chinese market, down 140,000 units from the previous year. During the same period, sales in the Indian market reached 510,000 units. The sales gap, which was 240,000 units in 2018, has significantly decreased to 140,000 units.

The status of the Indian market within Hyundai Motor Group is expected to rise further. Hyundai plans to expand the production capacity of its Indian plants to about 750,000 units this year. Together with Kia Motors' Anantapur plant in India, which opened last July with an annual capacity of 300,000 units, Hyundai-Kia Motors will establish an annual production system of 1 million units this year. Kia Motors plans to bring the Anantapur plant to full operation within the next three years.

China, which began restructuring last year by suspending operations at Kia Motors' Yancheng plant 1, is effectively excluded from mid-to-long-term target markets. Instead, the Chinese market will focus on strengthening internal capabilities rather than expanding scale, through lineup optimization, strategic regional operations, and enhancing dealer competitiveness.

An industry insider said, "There are differing opinions on how much the Indian market can recover from last year's slump, but it is likely to show a gradual recovery. Not only are Hyundai and Kia increasing their market share, but with the production system also established, India's presence will grow even more."

This content was produced with the assistance of AI translation services.