Hyundai Motor is once again betting big on the Chinese market, this time on commercial vehicles through a deal with a state-run international investment bank on Tuesday. The deal is part of a new strategy for the Korean carmaker, which is targeting the world’s largest market where foreign carmakers are struggling to expand the pie.

According to Hyundai Motor, Hyundai Motor Group China signed a memorandum of understanding with the capital management department of state-owned China International Capital Corporation to jointly target the Chinese commercial vehicle market in line with the Chinese government’s policy shift toward smart, eco-friendly models under a carbon neutrality goal.

Established in 1995, CICC is China’s first joint-venture investment bank headquartered in Beijing and has over 200 branches in the Chinese mainland. The company is listed on the main board of the Hong Kong and Shanghai Stock Exchanges.

Under the agreement, Hyundai Motor will conduct R&D, manufacturing and dealership operations, while CICC and its capital management department will create new funds with government bodies, state-run companies and logistics conglomerate clients to establish new sales channels. The two firms are also considering a stake investment in each other, while details will be discussed further.

Market experts observed that the Korean carmaker will leverage the Chinese investment bank’s clients and investment network to secure new sales channels to revamp its sales, which have dwindled for the past few years.

In 2012, Hyundai Motor entered the Chinese commercial vehicle market by setting up the 50-50 joint venture firm Sichuan Hyundai Motor Co. The Korean carmaker now has full ownership of the company and has changed the company’s name to Hyundai Truck and Bus Co.

Despite HTBC’s annual production capacity of 160,000 units of commercial vehicles, its sales have been down in China due to the lingering impact of a diplomatic dispute between Seoul and Beijing over the deployment of the US-made Terminal High Altitude Area Defense anti-ballistic missile system in Korea in 2017.

Since 2016, when its sales within and exports to China reached a peak at 38,560 units, the figure fell to as low as 5,515 units in 2019. From January to September this year, it sold a total of 1,809 units, which could be a new low.

Market experts said that Hyundai is taking a new strategy targeting market demand with specific models – in particular, commercial vehicles -- after it experienced a pivotal failure with electric vehicle models. Last year, its EV sales in China totaled less than 5,000 units, mainly due to a competitive market led by Tesla, BYD, Nio and Xpeng.

“Although global firms are minimizing investment in China due to its political tension with the US, the Chinese automotive market is too big to abandon. (Hyundai Motor) should take on a new strategy in China, seeing it as a completely new market, compared to other global regions,” said Kim Pil-soo, an automotive engineering professor at Daelim University.

According to Hyundai Motor, it will actively push for more sales with a hydrogen fuel-cell electric bus built with a battery system developed at HTWO Guangzhou, appealing to Chinese customers with a hydrogen-friendly brand image. HTWO Guangzhou is the Korean carmaker’s first hydrogen fuel cell battery manufacturing and sales base outside Korea.

“The partnership with the Chinese investment bank will work as a driving force for us to enhance various customer needs and satisfaction in a rapidly evolving market centering on eco-friendly models,” said a Hyundai Motor official.