Hyundai Announces Plans for 5th Factory in China as Company Looks to Boost Sales by Increasing Production Capacity

Jun 24, 2015 09:18 AM EDT

(Photo : Getty Images) Hyundai has announced plans to build its fifth factory in China and diversify its line-up of vehicles in a bid to keep up with the trends and boost sales.

South Korean automaker Hyundai has unveiled plans to build its fifth factory in China as the company looks to increase its production of sports utility vehicles (SUVs) in a bid to reverse its slacking sales.

According to Korea Times, at a ground breaking ceremony for the new factory in Chongqing, Hyundai Motors Vice Chairman Chung Eui-sun explained that the factory will enable the company effectively reach customers in western China. "We will become global carmaker with large production bases that cover the East and the West of China," he said.

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Since the signing of a free trade agreement (FTA) between China and South Korea earlier in the year, Hyundai has progressively accelerated its expansion into China's large auto market. This is the second factory that Hyundai is building in China at the moment. In March, the company announced that its fourth factory in the country was under construction.

Since last year, Hyundai has struggled to compete in the auto market as the company lacked new models of SUVs to benefit from cheaper fuel prices. After announcing that Hyundai's net profit had reduced by about 1% in the first five months of this year as compared to the same period in 2014, Lee Won-hee, the president of the company, admitted during a conference call that the lack of new model SUVs is partly to blame for this outcome, according to Reuters.

He revealed that Hyundai was considering expanding its production capacity in China and also entering the pick-up truck market.

A statement from Hyundai revealed that the new $1 billion plant in Chongqing will have a production capacity of about 300,000 vehicles annually. The company aims to create cost effective SUVs and branch into the production of environmentally friendly vehicles. Hyundai has further revealed that it is will increase its yearly production capacity to about 2.7 million vehicles by 2018 and increase its dealerships by 300 in 2016 to boost customer service.

TagsHyundai, Hyundai new factory China, Hyundai Chongqing factory, Hyundai SUVs, Hyundai hybrid cars