[NEWS IN FOCUS] Hyundai Motor begins comeback in China

Industry

Published: 15 Jul. 2023, 07:00 Updated: 16 Jul. 2023, 17:44

[NEWS IN FOCUS] Hyundai Motor begins comeback in China

Hyundai Motor announces its business strategies to target the Chinese market at the Auto Shanghai 2023 held in Shanghai in April. [YONHAP]

Hyundai Motor is slowly bouncing back in China, the world's biggest auto market which is still largely dominated by a few local brands.

China has been considered a wasteland for Korean automakers since the late 2010s as a wide range of Korean products was largely neglected in China when the two countries clashed over the deployment of the Terminal High Altitude Area Defense system, or Thaad.

Hyundai Motor employees work its plant in Beijing [HYUNDAI MOTOR]

The Korean automaker sold a total of 118,327 vehicles in China in the first half of this year, up 26 percent on year. Although this is half of the figures from six to seven years ago, it is the first time the automaker saw a double-digit increase in Chinese sales since 2018.

Increased sales of SUVs helped, with sales of Tucson Ls and ix35s, both China-dedicated models, rising 29 percent on year in the first half.

The sales increase is notable considering that other foreign brands saw a decline in sales in China during the same period. Volkswagen and Toyota sales dropped around 3 percent in China in the first half of this year, while Honda and Nissan plunged some 25 percent during the same period.

The sales hike came as Hyundai Motor CEO Chang Jae-hoon earlier in the year announced a reorganization of its business in China, aiming to increase sales by 40 percent this year.

“Hyundai Motor will improve brand awareness through premium products like high-performance N models, Genesis and Palisade SUVs," he said.

Hyundai Motor originally operated five factories in China. But only two plants are currently in operation, as the remainder were either sold off or shut down.

Hyundai Motor's Mufasa SUV, a China-dedicated SUV model, was unveiled at the Auto Shanghai 2023 held in Shanghai in April. [HYUNDAI MOTOR]

It also reduced available sale models from 13 to eight and instead focus on premium SUVs, EVs, and premium Genesis vehicles.

The company plans to introduce the New Elantra N sedan, also known as The New Avante N in Korea, in the second half. It will be the first N model to be introduced in China.

It has also started sales for Mufasa SUV, a strategic model designed specifically for the Chinese market.

Experts, however, say it’s too early to toast Hyundai's success.

“China is a massive market where more than 2 million vehicles are sold per month, so it’s too early to say that selling vehicles barely over 100,000 units is meaningful,” Lee Hang-gu, a senior analyst at the Korea Automotive Technology Institute (KATI), said.

“We should wait and see at least until the third quarter, and focus more on market share rather than sales,” he added. “It’s still a good signal that the Chinese auto market is recovering and Hyundai plans to target with new EV models.”

First entered in 2002, Hyundai Motor's Chinese sales peaked in 2016, when it sold a total of 1.1 million units, or 6.4 percent of the market.

Hyundai Motor's plant in Beijing [HYUNDAI MOTOR]

Hana Securities researcher Song Sun-jae emphasizes the importance of EV models.

“It’s fortunate that Hyundai’s market share is increasing from 2022, but we can’t conclude the growth is meaningful at the time,” he said. “Introduction of new EV models and their performance will determine its recovery.”

Hyundai plans to release the upcoming Ioniq 5 N, the first electrified model in the N series, in China next year.

Kia will introduce EV5, a China-dedicated EV model, this November and plans to roll out at least one type of EV model in China every year by 2027.

The plan is to sell 450,000 cars in China by 2030, with EV sales taking up 40 percent of the total, according to the company.

China is currently the world’s largest EV market and demand is surging constantly. A total of 3.1 million eco-friendly vehicles were sold in China, up 37.3 percent on year.