May 19, 2016 12:54
Hyundai is suffering sluggish sales both at home and abroad although the market is growing steadily.
Since last month Korea's biggest carmaker has been offering three-year, no-interest installment plans on nine models including the premium Genesis DH sedan. The no-interest payment plan overall is the largest since the 1997-98 Asian financial crisis.
The top-of-the-line Genesis EQ900 is excluded from the promotional offer, but most bread-and-butter models (Avante, Sonata, Grandeur) are included.
◆ Declining Sales
The other four Korean carmakers' sales increased more than 10 percent last month compared to the same month of 2015. Powered by soaring sales of the new SM6 sedan, Renault Samsung's sales surged 22 percent, while Hyundai affiliate Kia's sales grew 13 percent. But Hyundai's fell six percent.
Its domestic market share is declining. Until 2009, shortly after the global financial crisis, Hyundai accounted for around 50 percent of the domestic market, but that fell to 41.8 percent in March this year. Last month, Hyundai lost the No. 1 spot to Kia. Considering only passenger cars, Kia sold 43,426 in April, outpacing Hyundai's 43,216. The last time Kia outpaced Hyundai was in December 2013.
That is why Hyundai is offering such favorable terms. On top of the no-interest installment plan, Hyundai is also offering Grandeur buyers a chance to change to a face-lifted model a year after purchase.
Hyundai's troubles stem from the lack of new models in its lineup. New models of the Grandeur and Santa Fe are not due until the end of this year, so the slump is expected to continue.
◆ Sluggish Exports
Hyundai is faring poorly overseas markets as well, selling 1.3 million cars around the world from January to April, down 7.3 percent compared to the same period of 2015.
Slow economic conditions in emerging markets are partly to blame, but sales in the key Chinese and U.S. markets were anything but stellar. In the first four months, its sales in the U.S. fell 1.9 percent on-year while rivals Honda, Nissan and Ford saw sales rise 9.2 percent, 9.8 percent and 7.1 percent.
Hyundai sold about12,000 units of its newly-released Avante compact (sold as the Elantra) in the U.S. last month, just half the sales of the older model during the same period of 2015. Sales of the midsize Sonata also dropped more than 15 percent so far this year.
Sales in China, the world's biggest market, were also slow in the first quarter. The Chinese car market grew more than 10 percent, but Hyundai's sales fell by more than that as demand for the Avante and Accent subcompact waned.
"Hyundai increased its market share by offering cars at competitive prices but has now been beaten by local automakers in China and is being squeezed by rivals in the U.S. who are rolling out new models," said Lee Hang-koo at the Korea Institute for Industrial Economics and Trade. Lee added at this rate Hyundai and Kia will have a hard time selling more than a combined 8 million cars this year.
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