Korean Brands Losing Ground In Key MarketsAuto News
After nearly a decade of strong growth, Hyundai and Kia are now buckling under the pressure of renewed competitiveness from European and Japanese brands. Both brands are losing market share not just in export markets but also in its domestic market in South Korea.
Bloomberg reported that Hyundai’s market share in Korea fell to 32 percent in January this year, the lowest in 15 years, as sales of imported models from Volkswagen and Audi rose.
The Audi A6 and Volkswagen Tiguan are the two best-selling imported models in Korea, while Mercedes-Benz and BMW are the best-selling import brands.
Both Hyundai and Kia were once described as a ‘Japanese car killer’ but the two leading Korean brands are now losing ground to a reinvigorated Toyota and Honda.
In China, which is Hyundai’s largest export market, the brand is under severe pressure. Hyundai has reportedly stopped releasing any monthly sales data after a sharp plunge in its July’s sales, which had reportedly dropped by almost 50 percent from March.
Data from the China Automobile Dealers Association revealed that the combined market share of Korean brands in China, including Kia and Ssangyong, dropped 2.5 points from last year to 6.5 percent in the first half of 2015, while Japanese brands made a strong comeback to claim 3.6 points from last year, now totalling 19.3 percent.
In contrast, Toyota, Honda and Nissan all made strong gains in the first half of 2015. Honda made the biggest gains, with sales rising 30 percent over the same period, while Toyota and Nissan gained 10 and 5.7 percent respectively over the same period last year.
Sales of Japanese brands in China dropped sharply in 2012 amidst political tensions between China and Japan, which later resulted in anti-Japanese sentiments amongst Chinese consumers.
Over in the US, Hyundai’s market share declined slightly by 0.1 points to 4.4 percent, but its market share was defended at a very high cost. According to US car price monitoring website TrueCar.com, Hyundai has been raising its incentives to dealers by 50 percent, to around USD2,400 per car, versus Honda’s USD1,400 per car.
In the first half of 2015, Hyundai’s operating profit fell 17.1 percent amidst a 3.2 percent drop in global sales.
Toyota too suffered a 1.5 percent drop in global sales as growth in emerging markets slowed, but the company’s cost reduction measures and a favourable exchange rate for the Japanese Yen aided its third straight year of record quarterly profit – reaching 646.39 billion Yen for the period between April to June 2015.
In Malaysia, Hyundai’s market share fell from 1.5 percent in 2014 to 1.1 percent (as of June 2015) while Kia fell from 1.5 to 0.8 percent. Mazda gained 0.3 points to 2.0 percent while Honda gained 1.9 points to 13.5 percent.