Hyundai Motor Company and Kia, South Korea’s leading carmakers, will begin selling 200,000 vehicles made in their manufacturing facilities in China this year. Hyundai recently introduced the “Sonata Taxi” manufactured in its Beijing factory to the South Korean market, marking the first sale of a China-made Hyundai car in Korea. Kia is gearing up to mass produce the all-electric Kia EV5 at its Yancheng plant in China, with plans to export the vehicles to the Middle East and ASEAN countries.
Hyundai and Kia are not the only carmakers ramping up production in China. Last year, Tesla sold 350,000 electric vehicles produced at its Shanghai plant in markets outside China, including Europe and Korea. Global carmakers such as BMW, Nissan, Honda and General Motors are adopting similar strategies.
Global carmakers initially built factories in China to tap into the country’s vast domestic market. They now use these facilities as export hubs for ASEAN, the Middle East, and other regions. This shift is partly a response to intensifying competition with Chinese EV makers and China’s economic slowdown. The strategy involves reverse-exporting “Made in China” cars back to their home countries and targeting markets in Asia, the Middle East, and Latin America - regions less affected by U.S.-China tensions. In the auto industry, this approach is seen as part of the “decoupling from China” strategy, driven by the need to leverage existing facilities to their fullest, given the challenges associated with relocating production facilities outside China all at once.
BMW is leading this shift, partnering with China’s Great Wall Motors to manufacture the new electric MINI in Jiangsu, aiming to export 160,000 units globally this year. The carmaker is already producing the BMW iX3 electric SUV in China.
Starting next year, Nissan plans to manufacture and export 100,000 electric and plug-in hybrid vehicles made in China. GM has been exporting small gasoline cars such as the Chevrolet Onix, which has been made in China since 2022, to Latin America. Volvo and Lotus, both partly owned by China’s Geely Group, also have their main production facilities in China. Volvo’s electric vehicle, EX30, is also primarily manufactured in China.
Manufacturing cars in China offer carmakers competitive pricing, as labor costs in China are still lower compared to major countries. Carmakers are also able to maintain relatively high production quality.
The main advantage of this strategy is lower labor costs compared to major countries, which offer competitive pricing while maintaining quality. The workforce is Chinese, but these companies employ standardized and automated production processes worldwide, ensuring minimal quality disparity.
As the leader in the EV industry, China also offers a robust supply chain for components, such as CATL batteries. This allows for cheaper and faster procurement of key parts. An executive from a European automotive brand in Korea remarked, “Tesla, which produces half of its global sales volume in China, has already demonstrated the efficacy of this strategy.”