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| Hyundai Motor plans to sell its first plant in Beijing, after suspending its operation in 2019, as demand for its cars in China has been falling since 2017. Korea Times file |
By Kim Hyun-bin
It will be difficult for Hyundai Motor Group to reclaim its once-dominant market position in China, where local carmakers have been chipping away at its market share over the years through significant improvements to their designs and safety, according to analysts, Thursday.
In addition, they said Hyundai Motor and Kia have failed to build a premium brand image in the world's second-largest market and have lagged behind BMW, Mercedes-Benz, Audi and other European carmakers.
The two affiliated Korean carmakers' combined sales peaked with 1.79 million cars in 2016, but the number has since been declining, dropping below 500,000 last year.
In July 2016, Korea announced its deployment of a U.S. Terminal High Altitude Area Defense (THAAD), triggering a strong boycott of Korean products in China. Hyundai Motor Group saw its sales in China sink to 1.2 million in 2017 and continue falling ever since.
Hyundai sold 350,277 vehicles in China last year and Kia sold 127,005, recording 477,282 total combined sales. After peaking at 1.79 million sales in 2016, the company broke below the 1 million mark in 2019, and since then the sales volume has halved in just two years.
In addition, the company's annual production capacity in China, which had accounted for 2.7 million vehicles, has also shrunk to 2.26 million due to the conglomerate shutting down plants in response to decreased demand. Hyundai Motor's Beijing plant is in the process of being sold, and Kia's Yancheng plant halted its production line.
Even before the THAAD issue hit the carmakers, analysts point out that Hyundai's competitiveness in the market has declined over the years with other foreign carmakers taking up Hyundai's market share.
"The market share decrease due to THAAD is just an excuse. Hyundai competiveness has decreased drastically over the years in the premium market due to luxury brands such as BMW, Mercedes-Benz and Audi, while Chinese local brands have been making technological advancements taking over lower-tier lineups. Hyundai has been sandwiched in the middle struggling to enhance its market share," said Song Sun-jae, senior analyst at Hana Financial Investment. "This trend is expected to continue for the time being."
Some experts point out that the company needs to better target the premium market armed with advanced systems centered on electric vehicles (EV) such as Genesis to differentiate from local Chinese brands.
"We have to compete with electric vehicles and Genesis to penetrate the market, but we are not ahead of our competitors that already occupy the sector," said Lee Hang-koo, a researcher at the Korea Automotive Technology Institute.
Hyundai announced it will develop market-specific R&D and market strategies for the Chinese marketing and promoted the establishment of a leading digital research institute in Shanghai to develop future technologies such as autonomous driving, connected cars, electrification and shared mobility, to better differentiate and renew the brand image.
"Hyundai Motor Company and Beijing Hyundai will continue to expand their eco-friendly car model lineup in the future and create a new wind in the Chinese market by adding high-performance models," a Hyundai Motor official said.
