Korea Investment & Securities voiced concerns that Hyundai Motor’s decision to stop the operation of its Changzhou plant could have a negative impact not only on its car sales business in China but also on the performance of its affiliated automotive component makers.
Korea Investment, however, maintained its investment rating and target price for Hyundai Motor at “buy” and 162,000 won. According to the securities house, Beijing Hyundai recently informed its subcontractors that it would temporarily halt the operation of Hyundai Motor’s fourth plant in China.
The production of the plant will be stopped for a week from March 24 to April 1. The plant has a production capacity of about 200,000 vehicles a year.
Although the company said this measure was taken to technologically complement the production lines, there are some analysts who viewed this decision as a way to cope with the inventories piled up due to sluggish sales in China, caused by the country’s retaliatory stance against Korea’s THAAD deployment.