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How Hyundai Motor, once a rising star, lost its worth

At a near-empty Hyundai Motor showroom in the Chinese mega city of Chongqing, the store manager is grumbling about his shortage of customers and a lack of bigger, cheaper SUV models popular in the world’s largest auto market.

Even with discounting of as much as 25 percent, his dealership was selling barely a hundred vehicles a month, said the manager surnamed Li. A nearby Nissan (7201.T) dealership was selling about 400 vehicles a month, a store manager there said.

With sales weak and the Chinese auto market slowing sharply, the factory is running at roughly 30 percent of capacity, two people with knowledge of the matter said. The sources asked not to be identified because the information was not public. Hyundai, the world’s 5th largest automaker, declined to comment on the Chongqing plant’s production or the showroom’s sales but said it is “closely cooperating” with local partner BAIC (1958.HK) to turn around the China business. BAIC did not respond to requests for comment.

Hyundai’s woes mark a major reversal for the automaker which was an early success story in China as it quickly and cheaply rolled out popular new models into a surging market.

In 2009, Hyundai and partner Kia’s combined sales ranked third in China after General Motors (GM.N) and Volkswagen. The South Korean duo now ranks ninth and its market share in China has more than halved to 4 percent last year, from more than 10 percent at the beginning of this decade.

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