Hyundai Motor shifts focus to India from China

Settings

ⓕ font-size

  • -2
  • -1
  • 0
  • +1
  • +2

Hyundai Motor shifts focus to India from China

Kia Motors plant in Andhra Pradesh, India / Courtesy of Kia Motors

By Nam Hyun-woo

Hyundai Motor and Kia Motors are investing heavily in India to capitalize on growing automobile demand in the Southeast Asian nation as they scale down their operations in China, according to industry officials Wednesday.

The two Korean carmakers have been struggling in the mainland over the past few years due to intensifying competition and rising labor and other costs. China's slowing car demand has also prompted Hyundai and Kia to look to India and other newly emerging markets as a global manufacturing hub, they said.

According to data from the Korea Automobile Manufacturers Association, Hyundai Motor produced 351,837 vehicles in India in the first half of this year, surpassing 288,060 assembled in China during the same period. This made India the company's largest overseas manufacturing base.

Kia Motors has also begun the operation of its plant in India, producing the compact SUV Seltos. Given the new plant can produce up to 300,000 vehicles a year and Kia's manufacturing volume in China is also declining, India is expected to stand as the group's largest manufacturing base capable of 1 million vehicle a year in the near future.

The transition is largely due to the downfall in the manufacturing volume in China, the two brands' main market and assembly base.


In the first half of this year, the number of vehicles Hyundai Motor produced in China dropped by 23.9 percent to 288,060 from 378,629 a year earlier following the shutdown of Beijing Hyundai Motor Company Plant 1 in March.

Kia Motors, which also halted the operation of a plant in Yancheng, Jiangsu Province, in June, saw the output declining to 153,500 in the first half of this year from 176,000 a year earlier.

"The drop is attributable to the group's unsuccessful strategy in China for the past three years," said Kim Yong-jin, a Sogang University professor and chairman of the Korean Academy of Motor Industry.

"The consumers in the Chinese market are keen on new technology and new trends. To survive in the market, a carmaker has to be prompt in applying Fourth Industrial Revolution technologies to its cars or refreshing its portfolio with SUVs. However, Hyundai brands were not fast enough."

Along with the strategic failure, Kim said the output drop came amid the slow recovery of Hyundai and Kia vehicles' sales in China which were hit hard by China's economic retaliation on Seoul's deployment of a U.S. Terminal High Altitude Area Defense (THAAD) missile system in 2017.

In 2016, Hyundai assembled 1.18 million vehicles in China, but the number fell below the 1 million mark to 827,941 in 2017 and 806,214 last year. Kia's China output has nearly halved from 650,041 in 2016 to 354,607 in 2017.

Instead, Hyundai and Kia are putting greater focus on India, as the market is growing faster than expected.

"Along with the growth potential of the Indian automobile market itself, it is easier for a foreign company to do business there, compared to China," Kim said.

Though the growth of the Indian car market has been weakening this year amid the global economic slowdown, the market had been expanding an average 6 percent from 2013 to 2018 and such potential will continue in the long-term, analysts said.

To enhance its presence in the market, Hyundai debuted the Venue mini SUV there for the first time in the world and Kia revealed Seltos as a world premiere.

The Venue, which began India sales in June, retailed 9,585 last month, with the number of orders surpassing 50,000. The Seltos, which will hit the Indian market on Aug. 22, has already seen the number of preorders surpassing 22,000.

For future vehicle and mobility services, Hyundai Motor Group has invested $300 million into Indian ride-hailing firm Ola and plans to pour an additional 1.1 trillion won to set up assembly lines for electric vehicles.

"India is and will be one of the key overseas footholds for Hyundai Motor Group and the group plans to increase efforts to spur sales in the country," a Hyundai Motor Group official said.

Hyundai Motor is No. 2 automobile brand in India, following Maruti Suzuki.



Kia Motors plant in Andhra Pradesh, India / Courtesy of Kia Motors

By Nam Hyun-woo

Hyundai Motor and Kia Motors are investing heavily in India to capitalize on growing automobile demand in the Southeast Asian nation as they scale down their operations in China, according to industry officials Wednesday.

The two Korean carmakers have been struggling in the mainland over the past few years due to intensifying competition and rising labor and other costs. China's slowing car demand has also prompted Hyundai and Kia to look to India and other newly emerging markets as a global manufacturing hub, they said.

According to data from the Korea Automobile Manufacturers Association, Hyundai Motor produced 351,837 vehicles in India in the first half of this year, surpassing 288,060 assembled in China during the same period. This made India the company's largest overseas manufacturing base.

Kia Motors has also begun the operation of its plant in India, producing the compact SUV Seltos. Given the new plant can produce up to 300,000 vehicles a year and Kia's manufacturing volume in China is also declining, India is expected to stand as the group's largest manufacturing base capable of 1 million vehicle a year in the near future.

The transition is largely due to the downfall in the manufacturing volume in China, the two brands' main market and assembly base.


In the first half of this year, the number of vehicles Hyundai Motor produced in China dropped by 23.9 percent to 288,060 from 378,629 a year earlier following the shutdown of Beijing Hyundai Motor Company Plant 1 in March.

Kia Motors, which also halted the operation of a plant in Yancheng, Jiangsu Province, in June, saw the output declining to 153,500 in the first half of this year from 176,000 a year earlier.

"The drop is attributable to the group's unsuccessful strategy in China for the past three years," said Kim Yong-jin, a Sogang University professor and chairman of the Korean Academy of Motor Industry.

"The consumers in the Chinese market are keen on new technology and new trends. To survive in the market, a carmaker has to be prompt in applying Fourth Industrial Revolution technologies to its cars or refreshing its portfolio with SUVs. However, Hyundai brands were not fast enough."

Along with the strategic failure, Kim said the output drop came amid the slow recovery of Hyundai and Kia vehicles' sales in China which were hit hard by China's economic retaliation on Seoul's deployment of a U.S. Terminal High Altitude Area Defense (THAAD) missile system in 2017.

In 2016, Hyundai assembled 1.18 million vehicles in China, but the number fell below the 1 million mark to 827,941 in 2017 and 806,214 last year. Kia's China output has nearly halved from 650,041 in 2016 to 354,607 in 2017.

Instead, Hyundai and Kia are putting greater focus on India, as the market is growing faster than expected.

"Along with the growth potential of the Indian automobile market itself, it is easier for a foreign company to do business there, compared to China," Kim said.

Though the growth of the Indian car market has been weakening this year amid the global economic slowdown, the market had been expanding an average 6 percent from 2013 to 2018 and such potential will continue in the long-term, analysts said.

To enhance its presence in the market, Hyundai debuted the Venue mini SUV there for the first time in the world and Kia revealed Seltos as a world premiere.

The Venue, which began India sales in June, retailed 9,585 last month, with the number of orders surpassing 50,000. The Seltos, which will hit the Indian market on Aug. 22, has already seen the number of preorders surpassing 22,000.

For future vehicle and mobility services, Hyundai Motor Group has invested $300 million into Indian ride-hailing firm Ola and plans to pour an additional 1.1 trillion won to set up assembly lines for electric vehicles.

"India is and will be one of the key overseas footholds for Hyundai Motor Group and the group plans to increase efforts to spur sales in the country," a Hyundai Motor Group official said.

Hyundai Motor is No. 2 automobile brand in India, following Maruti Suzuki.



Nam Hyun-woo namhw@koreatimes.co.kr


Top 10 Stories

X
CLOSE

LETTER

Sign up for eNewsletter