(Yicai Global) Feb. 22 -- Beijing Hyundai Motor has suspended operations at its plant in the Chinese city of Chongqing because the South Korean car giant’s joint venture in the country is struggling with overcapacity due to sluggish sales, Yicai Global learned.

“The Chongqing plant has halted production and most workers have been put on leave,” an insider at the company told Yicai Global, adding that the plant shut last December.

Beijing Hyundai told Yicai Global that it did not issue any shutdown notice.

The Chongqing plant can produce 300,000 vehicles and 300,000 engines a year. It makes the Verna, Encino, Lafesta, and ix25 models, none of which are bestsellers. Sales of Encino, for example, have been in double-digit figures for several months.

Beijing Hyundai’s sales sank to 385,000 vehicles last year from a peak of 1.1 million in 2016. Its sales goal for 2021 was 560,000.

The automaker had five large plants with a total annual capacity of almost 1.7 million in China, but sold its No. 1 plant in Beijing last year to Li Auto after suspending production for two years. Speculation has it that the firm was set to sell its second plant in Beijing and the Chongqing factory to Xiaomi EV and Li Auto, respectively.

“The market shares of South Korean cars are declining as Chinese self-developed brands are rising and the price of major JV vehicles is falling,” auto industry analyst Zhang Xiang told Yicai Global.

South Korean passenger carmakers saw their share of the Chinese market fall to 1.7 percent last month, per statistics from the China Association of Automobile Manufacturers.

Editors: Tang Shihua, Futura Costaglione