Hyundai will close its oldest plant in China as early as next month due to plummeting sales in the world's biggest market, South Korean media reported.

The Chosunilbo said the automaker had suffered from declining performance since China's unofficial boycott of Korean products two years ago which led to its factory operation being cut to half capacity.

Beijing Hyundai, the joint venture between BAIC and Hyundai, recently offered voluntary redundancies to over 2,000 workers at its three plants in Beijing and what workforce is left at the doomed plant will be moved to the other two.

"We don't have an exact timeline yet but we are in the process of closing the outdated plant to adjust our capacity," a Hyundai spokesman told the business daily. "We haven't made a firm decision on whether to shut it down completely or not and will review what we're going to do with it."

Built in 2002, the factory has capacity of 300,000 cars a year. Beijing Hyundai increased production capacity to 1.65m cars by building two additional plants in Beijing, plus more in Changzhou and Chongqing.

The plant was in its prime between 2013 and 2016 when it built over 1m cars for four consecutive years. But the boycott hit and sales plunged to 785,000 in 2017 and remained at 790,000 last year, less than half capacity, even though the boycott was gradually lifted.

Even if Beijing Hyundai achieves this year's goal of selling 900,000 units, the operation rate is still running on half output.

Lee Hang-gu at the Korea Institute for Industrial Economics and Trade, told The Chosunilbo: "To avoid making losses, plants should operate at more than 70% of capacity, so Hyundai has no choice but to close one or two plants in China."

BAIC also has a joint venture with Daimler, Beijing Benz. That operation has been expanded greatly in recent years.

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