It has been confirmed that Hyundai Motor has scrapped its production plan of Genesis in the Chinese market, which it considered as its first overseas production base since the brand's launch in 2015. It is believed that Hyundai and Kia Motors' severe sales in the Chinese market have spread to Genesis.
A media outlet reported on June 19 that Hyundai Motor has recently decided to produce GV70 (JK1 in project name) in Korea, which is scheduled to be produced in the second half of next year.
According to the media, Hyundai initially planned to produce around 50,000 GV70s (Genesis) at its Changzhou plant in China.
They include 20,000 basic cars and 30,000 long wheel-base models (LWB). The move was quickened by the establishment of a separate specialized sales company to sell Genesis vehicles in Shanghai, China, earlier this year.
With the aim of officially launching the Genesis brand as early as the end of the year, the company is reportedly considering establishing a hub in major Chinese cities besides Shanghai.
Currently, a measure that will allow Genesis to enter the Chinese market is considered to be made and exported in existing Korea. However, it is predicted that sales will be low due to lack of price competitiveness in the face of tariff barriers.
The reason why Hyundai scrapped its previous plan is because of the companies' severe sales slump in the Chinese market. Hyundai Motor's sales in China, which had topped 1 million before the THAAD missile defense system crisis in 2017, fell to 785,000 units in 2017. Last year, the figure also stood at 790,000 units.
Kia Motors' sales in China last year halved to 370,000 units from 650,000 units in 2016. In the first five months of this year, Hyundai and Kia's retail sales fell 5.7 percent and 24.4 percent to 50,351 units and 23,170 units, respectively.
The continued slump in sales eventually led Hyundai and Kia to decide to shut down their plants. Following Hyundai's Chinese joint venture Beijing Hyundai's suspension of operations at its first plant in Beijing in April, Dongfeng Yueda Kia's first plant in China's Jiangsu Province will be leased to Yueda Group, the shareholder of the joint venture. Both plants are the company's No. 1 plants in China established after entering China.