April 26, 2024

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[ET NEWS] BAIC Motor, the Chinese joint venture partner of Hyundai Motor, is seeking to acquire a sizeable stake in the local unit of Hyundai Mobis, possibly to have more influence in parts supplies and pricing overall, according to industry sources on March 6.

Beijing Hyundai, the JV, has pinpointed high parts prices as the key reason behind its sluggish car sales since last year, asking Hyundai and the key supplier Hyundai Mobis to lower supply prices. Beijing Mobis, the Chinese unit, is 100 percent owned by Seoul-based Hyundai Mobis. 

“We have tentatively agreed to transfer some stake in Beijing Mobis,” a ranking official of Beijing Motors Group, the parent firm of BAIC Motor, told ET News on condition of anonymity, declining to further elaborate. “The stake purchase is part of our joint efforts with Hyundai to elevate car sales in China.”

Despite the claims of its Chinese partner, Hyundai Mobis has denied that related talks are ongoing. A company spokesperson said: “We have received no official request on the stake transfer so far.”

Sources say BAIC Motor is likely to ask to share some classified information like the manufacturing costs of key parts or to transfer some of its own personnel to the company on conditions of the stake purchase.

Amid the heightened diplomatic tensions between Korea and China in recent years, BAIC Motor was increasingly putting pressure on Hyundai to lower parts prices. In December 2016, Chairman Xu Heyi visited Seoul to discuss related issues with his counterpart Chung Mong-koo.

Beijing Hyundai sold 816,000 vehicles last year, a 27.8 percent plunge from a year ago. For Hyundai Mobis, Chinese sales make up almost 10 percent of its total revenue. Last year, the parts unit posted 35.14 trillion won (US$32.67 billion) in sales and 2.38 trillion won operating profit in 2017, down 8.1 percent and 29.8 percent, respectively.

By Park Tae-joon (gaius@etnews.com) (jylee@heraldcorp.com)
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