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Hyundai faces tough decisions in China where plummeting sales have cast a pall over blockbuster year globally
- A lacklustre performance is raising questions about Hyundai’s future in the world’s biggest automobile market
- The carmaker now commands less than 2 per cent of the Chinese market, down from about 10 per cent in its heyday in 2009
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Hyundai Motor and its affiliate Kia Corp are having a blockbuster year, posting record profits as sales surge globally. The only black mark is China, where a lacklustre performance is raising questions about their future in the world’s biggest automobile market.
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The Korean carmakers’ sales there have dropped off a cliff amid a fierce price war and a rapid transition to electric vehicles. The impact is apparent, with Hyundai cutting its manufacturing facilities in the country by more than half and reducing its line-up to eight mainly luxury brands, down from 13.
While Hyundai and Kia have suffered sagging sales in China for more than five years, the first seven months of 2023 were the worst in at least 15 years, according to the China Automotive Technology and Research Center. Including Kia, the world’s third-largest carmaker now commands less than 2 per cent of the Chinese market, down from about 10 per cent during its heyday in 2009.
The companies now need to make tough decisions about how they plan to operate in their Asian neighbour’s auto market, which makes up just 5 per cent of their sales. Even with disappointing results in China, Hyundai reported its highest quarterly profit in history for the three months ended June 30 – after posting record earnings in 2022 – led by popular models like the Ioniq 5 EVs in Europe and Tucson SUVs in the US.
Their success outside China is raising questions about how they should operate within it.
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“To increase market share in China, Hyundai would have to reduce supplies to US and Europe,” said Kim Jin-Woo, an analyst at Korea Investment and Securities in Seoul. “Should they sacrifice the high margins in those markets? I’m not sure.”
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