File photo/Zhang Jian (NBD)

South Korea's Hyundai brand is facing a supply glut in China and plans to shut down one of its Beijing plants in May, Hyundai dealership owners and employees said on Wednesday.

A report by Bloomberg said the company is halting production at its oldest joint venture (JV) plant in China, the world's largest auto market. 

The South Korean carmaker beat estimates by posting an operating profit of $718 million in the first quarter due to the performance of its new sport utility vehicles and spending cuts in the US, on Wednesday.

However, Beijing Hyundai's first-quarter auto sales fell by 18 percent to the lowest level since 2009, the Bloomberg report said. 

An employee at Beijing Hyundai Motor Co, who declined to be identified, confirmed the impending shutdown in media reports. 

"When the land lease ends in May, the plant will be shut down," the employee said. 

The plant had an original work force of 10,000, but there were job cuts and the remaining workers were transferred to other plants, the source said.  

The South Korean brand has five plants in the form of JVs with its Chinese partner BAIC Motor Corp. This includes three plants in Beijing, one in North China's Hebei Province and one in Southwest China's Chongqing Municipality. The plant planned to be closed is named No.1 plant.

"The reported closure could be part of Hyundai's move to address the production overcapacity issue," said Wang Rongzhen, owner of a dealership for Hyundai imported cars in Nantong, East China's Jiangsu Province.

"Hyundai sales almost halved in China in 2018. The brand now faces a supply glut," Wang told the Global Times on Wednesday.

But Wang said that Hyundai dealerships won't be affected.

In 2018, the Chinese auto market contracted for the first time in more than two decades, with annual sales down by 2.8 percent year-on-year to 28.1 million units, the China Association of Automobile Manufacturers said in January.

"It's not just Hyundai. Other brands are also reining in output... to allow inventories to be consumed first," Wang said. 

"Efficiency at the No.1 plant is low. After efficiency improved after downsizing efforts, the company is in good shape," the employee at Beijing Hyundai Motor said. "We just received a quarterly bonus. We hadn't had that for a very long time."

Hyundai did not respond to a Global Times inquiry as of press time on Wednesday. 

The South Korean brand has suffered from weak competitiveness, discord with its JV partner and dealers in China, and production glitches in recent years. It was also affected by the falling appeal among Chinese consumers for South Korean brands after the country's deployment of the US Terminal High Altitude Area Defense anti-missile system.

Email: lansuying@nbd.com.cn