Overseas challenges have passed... Growing concerns for Hyundai Kia Motors in the domestic market

Domestic Market 'Uncertainty' Amid COVID-19 Pandemic
Impact Inevitable Once Lockdowns Begin

Overseas Markets Like US and India Recovering
Production Up and Exports Improving

Mixed Outlook for Second Half: 'Slump vs. Recovery'

[Asia Economy Reporter Kim Ji-hee] Hyundai Kia Motors has launched an emergency inspection of its domestic production and sales market. This is because the fear of a resurgence of the novel coronavirus infection (COVID-19) has grown, triggering alarm bells in the domestic market that had supported performance so far.

According to the industry on the 27th, Hyundai Kia Motors decided to switch new car launch events to online in the second half of this year and unveiled the Stinger Meister launch event through Kia Motors' YouTube and Naver TV on the same day. Not only sales but also production sites are tightening quarantine measures. To prevent the spread of COVID-19 within the factory, they are checking whether employees have visited other regions and requiring new hires such as contract workers to respond daily to pre-surveys related to COVID-19 until their employment begins.

The focus on quarantine along with the shift to online marketing is due to the domestic sales, which had been solid, becoming precarious amid the rapid resurgence of COVID-19. Domestic sales have also slowed since July as the government reduced the temporarily expanded individual consumption tax benefit (from 3.5% to 1.5%). An urgent emergency inspection of the domestic market is needed in preparation for the realization of a more severe second COVID-19 wave than earlier this year.

Professor Kim Pil-su of the Department of Automotive Studies at Daelim University explained, "Even if COVID-19 spreads, until it reaches a full pandemic state, demand for 'my own safe means of transportation' increases, which can boost vehicle sales and the effect of the government's individual consumption tax reduction. However, if social distancing reaches level 3 or a complete lockdown occurs, movement itself stops, so automobile demand will also decrease."

2020 Palisade (Photo by Hyundai Motor Company) [Image source=Yonhap News]

The consolation is that the overseas market, which was hampered by COVID-19 in the first half of the year, is showing signs of recovery. According to the Korea Automobile Manufacturers Association, Hyundai Kia Motors produced 245,988 vehicles at overseas factories last month. Overseas production by Hyundai Kia Motors has rapidly increased after hitting a low below 100,000 units in April, with 157,598 units in May and 211,061 units in June. This figure is about 30,000 units less than in January this year, just before the COVID-19 wave swept the world.

Except for China, where the automobile market quickly normalized after March, most regions still have lower production compared to the previous year. However, it is notable that production in major countries such as the United States and India has rapidly recovered since July.

Last month, Hyundai Kia Motors' production volume in the United States was 45,300 units, about 5,000 units less than the average monthly volume last year. Hyundai Motor's production nearly tripled compared to the previous month (8,555 units), and Kia Motors also increased by 50% during the same period, producing more vehicles than the average monthly volume last year. The Indian plant, which experienced a 'zero units' shock due to a nationwide shutdown in April, has quickly overcome the crisis and reaffirmed its position as a key production base for Hyundai Kia Motors. Hyundai Motor's Indian plant, which produced about 10,000 vehicles for two consecutive months in May and June, produced 42,000 units in July alone. Kia Motors' Anantapur plant exceeded the 10,000 units monthly production mark for the first time in four months.

As the tightly blocked global automobile market gradually loosens, exports have also clearly improved since July. Hyundai Motor's exports in July reached 79,738 units, narrowing the gap with the 2019 average by about 6,000 units. Kia Motors' upward trend is even steeper. Last month's export volume was 75,366 units, fully recovering to last year's level.

Therefore, mixed forecasts coexist for the market in the second half of the year. Since the global market has been recovering after hitting a low in April, the prevailing view is that the second half will compensate for the sluggishness in the first half. However, concerns remain about the variable of COVID-19 resurgence. An industry official said, "Initially, there was a forecast that supply and demand, which had been postponed, would concentrate once the COVID-19 situation entered a calming phase. However, if major countries worldwide respond to the resurgence of COVID-19 by pulling out lockdown measures similar to those earlier this year, the market will inevitably decline again."

This content was produced with the assistance of AI translation services.